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Tunisia to Receive 450 Million Euros in European Loans, Grants

Members of the honor guard stand at attention during a flag-raising in place of Kasba in Tunis, Tunisia, June 26, 2018. REUTERS/Zoubeir Souissi
Members of the honor guard stand at attention during a flag-raising in place of Kasba in Tunis, Tunisia, June 26, 2018. REUTERS/Zoubeir Souissi
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Tunisia to Receive 450 Million Euros in European Loans, Grants

Members of the honor guard stand at attention during a flag-raising in place of Kasba in Tunis, Tunisia, June 26, 2018. REUTERS/Zoubeir Souissi
Members of the honor guard stand at attention during a flag-raising in place of Kasba in Tunis, Tunisia, June 26, 2018. REUTERS/Zoubeir Souissi

The European Investment Bank on Tuesday announced grants and loans worth 450 million euros ($480 million) for crisis-hit Tunisia to support small and medium-sized enterprises and infrastructure projects.

The EIB, the European Union's investment arm, said it was providing "new financial support" to Tunisia, targeting "high-impact projects for the population and the country's economic and social development".

The financing will be formalized during the Tunisia Investment Forum to be held on Wednesday and Thursday in Tunis, the bank said in a statement.

The forum will be attended by the EIB's new vice-president in charge of financing in the Maghreb region, Ioannis Tsakiris, Reuters reported.

The funding "will play a crucial role in the creation of jobs, stimulating innovation and promoting balanced development to benefit all Tunisians", Tsakiris said in the statement.

The financing includes a line of credit worth 170 million euros for micro, small and medium-sized enterprises, "which make up 90 percent of the country's businesses and employ 60 percent of the workforce", according to the bank.

It will also provide 210 million euros to develop the "strategic" route between Tunisia's second city of Sfax on its eastern coast and the remote, underserved Kasserine area in the west.

A loan of 45 million euros will be granted to finance the ELMED electricity linkage project between Tunisia and Italy.

Tunisia has faced mounting financial woes, with debt levels at 80 percent of its GDP and unemployment and poverty on the rise.

The crisis has been compounded by the power grab staged by President Kais Saied since July 2021.

Negotiations with the International Monetary Fund for a $2 billion loan have stalled since then, with Saied rejecting reforms demanded by the body.

The crisis has driven thousands of Tunisians to attempt perilous Mediterranean boat crossings in the hope of finding better lives in Europe.

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Euro Rises after France's First-round Vote; Yen Fragile

The euro rose after the first round of France's snap election put the far-right in pole position. Reuters
The euro rose after the first round of France's snap election put the far-right in pole position. Reuters
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Euro Rises after France's First-round Vote; Yen Fragile

The euro rose after the first round of France's snap election put the far-right in pole position. Reuters
The euro rose after the first round of France's snap election put the far-right in pole position. Reuters

The euro rose on Monday after the first round of France's snap election put the far-right in pole position, though by a smaller margin than projected, while the yen struggled to break away from a near 38-year low.
Marine Le Pen's far-right National Rally (RN) party won the first round of France's parliamentary elections on Sunday, exit polls showed, although analysts noted the party won a smaller share of the vote than some polls had initially projected.
The euro, which has fallen some 0.8% since President Emmanuel Macron called the election on June 9, was last 0.4% higher at $1.0756, after having touched two-week top earlier in the session.
"They (RN) have actually performed a little bit worse than what was expected," said Carol Kong, a currency strategist at Commonwealth Bank of Australia.
"As a result of that, we saw the euro rise modestly in early Asian trade just because we might actually get less fears of more expansionary and unsustainable fiscal policy if the far-right party did a little bit worse."
The rise in the euro sent the dollar a touch lower against a basket of currencies, though the greenback was also reeling from data on Friday that showed US inflation cooled in May, cementing expectations the Federal Reserve will begin cutting interest rates later this year.
Market pricing now points to about a 63% chance of a Fed cut in September, as compared to a 55% chance a month ago, according to the CME FedWatch tool.
Against the dollar, sterling rose 0.11% to $1.2659, while the Aussie dipped 0.07% to $0.66655.
The New Zealand dollar edged 0.12% higher to $0.6098. The dollar index was last 0.11% lower at 105.61, having earlier hit a one-week trough.
"Should inflation continue to behave itself, and incoming data fall in line with the FOMC's forecasts, through the summer, the first 25bp cut remains on the cards as soon as September," said Michael Brown, senior research strategist at Pepperstone.

The yen struggled to gain ground against a broadly weaker dollar and was last 0.1% lower at 161.03 per dollar, standing just a whisker away from a 37-1/2-year low of 161.27 hit on Friday.
The Japanese currency had reversed early gains in the session following revised data that showed its economy shrank more than initially reported in the first quarter.
Separate data on Monday also showed the business mood in Japan's service-sector soured in June as the lower yen pushed costs higher, offsetting a big lift in factory confidence and pointing to consumption weakness.
The yen has already fallen more than 12% this year as it continues to be weighed down by stark interest rate differentials between the US and Japan, with its latest decline to the weaker side of 160 per dollar keeping investors on heightened alert for any intervention from Japanese authorities to prop up the currency.
Elsewhere in Asia, the Chinese yuan - also a victim of stark interest rate differentials with the US - fell a marginal 0.04% to 7.3204 per dollar in the offshore market.
The onshore yuan last stood at 7.2679 per dollar.
The Chinese currency drew some support from a private sector survey which showed factory activity among smaller Chinese manufacturers
grew at the fastest pace since 2021 thanks to overseas orders.
That came after official data over the weekend revealed China's manufacturing activity fell for a second month in June while services activity slipped to a five-month low.
"The PMIs for June were mixed but on balance suggest that the recovery lost some momentum last month," said economists at Capital Economics.
"We think economic activity will continue to hold up relatively well in the coming months. While the latest property stimulus has done little to boost new home sales, fiscal stimulus and strong exports should continue to support growth, at least in the near term."