Tunisia Limbo as IMF Says Time Needed to `Flesh Out’ Policy

TUNIS (Capital Markets in AfricaA) – Tunisia may have to wait a little longer for a much-anticipated IMF loan installment, as the Washington-based lender said the North African nation needs more time “to fully flesh out” its economic policy.

The statement, released by the International Monetary Fund at the end of a staff visit to Tunisia, underscores how the nation’s ongoing political bickering is taking its toll on the implementation of broader economic measures, such as curbing inflation, taming unemployment and cutting spending.

“Tunisian authorities are moving decisively on a policy agenda to stabilize and reform the economy, taking into account the strained socio-political situation in the run-up” to presidential and legislative elections later this year, Björn Rother, who headed the IMF mission, said in a statement. The fund and Tunisian officials “reached mutual understandings on most issues and agree that the authorities need some more time to fully flesh out their policy proposals in a few areas.”

Talks would continue in Washington, Rother said. A day earlier, Tunisia’s finance minister was quoted as saying the discussions with the fund were progressing in line with earlier talks and that he hoped for an “on time” disbursal of the $250 million installment of the $2.9 billion loan they secured from the IMF in 2016.

“The visit of the IMF delegation to Tunisia was positive, and we expect the sixth installment to be paid” after the fund’s board meets in May, Lotfi Ben Sassi, the prime minister’s economic adviser, said by phone, without elaborating.

The nation that launched the Arab Spring uprisings of 2011 has made significant gains in cementing democracy after years of autocratic rule. While it has avoided the chaos that gripped regional neighbors like Egypt and Libya, militant attacks targeting the tourism sector, frequent strikes and political bickering have stunted efforts to boost growth and stabilize the economy.

Annual inflation has stubbornly remained above 7 percent for the past few months, while the central bank resisted toying with rates even as the IMF said adjustments should be made to counter an acceleration in consumer prices that hit a 25-year high. The IMF, in its latest World Economic Outlook, projected annual inflation of 6.8 percent in 2019 and 5.2 percent in 2020.

While growth is expected to increase to 2.7 percent in 2019 from 2.6 percent last year, the pace of the gains “has remained insufficient to make a dent in unemployment, which remains especially high for youth and women,” Rother said. “The authorities have continued with policy and reform implementation; however, elevated macroeconomic vulnerabilities still threaten economic stability.”

Source: Bloomberg Business News