Tunisia awaits USD 319 million from IMF
Staff from the Fund visited Tunis and reviewed the agreement signed with the Arab country. The health of public finance, job creation and social protection should be priorities for the economy to grow.
São Paulo – Strong and urgent action by Tunisia’s government is needed for the country to sustain its economic stability and boost job creation. The need for the implementation of measures was agreed upon by leaders of the Arab country and a mission from the International Monetary Fund (IMF) that visited Tunis in the last few days.
The mission that traveled to the country was headed by Björn Rother and conducted a review of the program Extended Fund Facility (EFF) signed with the country. The approval by the IMF’s Executive Board will unlock a USD 319 million loan to Tunisia, totaling USD638.5 million in resources made available to the country up until now.
The IMF staff praised the government’s effort to act quickly. According to Rother, Tunisian economy is facing significant challenges, such as the fiscal and external deficits in record levels, inflation trending up and increasing public debt, which reached 63% of the Gross Domestic Product (GDP) at the end of last year.
“Growth in 2017 is expected to double to 2.3%, but will remain too low to significantly reduce unemployment, especially in the interior regions and among the youth,” said the economist in a statement made available by the IMF.
To create more economic opportunities and protect the health of public finances should be at the center of the government’s economic strategy. In the short term, priorities should be to increase tax revenue, reforms in the public sector that put wage bill on a sustainable level, the reduction of energy subsidies and covering the deficit in the social security system.
The IMF is also asking for an increase in social spending and targeting of the social safety net to protect the purchasing power of the most vulnerable. The fund also states that a tighter monetary policy will help contain inflationary pressure and a greater exchange rate flexibility would reduce the large trade deficit.
The participation of Tunisia in the G-20 Compact with Africa, a partnership between the group of the world’s largest economies and the continent, will be an opportunity for the country to take advantage of the success of the conference for investors that it held at the end of 2016 and reaffirm the government’s determination to build an improved economy future for the country, according to Rother.
The Fund staff met prime minister Youssef Chahed, Finance minister Lamia Zribi, minister of Investment Fadhel Abdelkefi, minister of Energy, Hela Cheikhrouhou, and the president of the Central Bank Chedly Ayari. It also talked with representatives of business association and the civil society.
*Translated by Sérgio Kakitani