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Tunisia Seeks New Program to Finance its Economy

Tunisia Seeks New Program to Finance its Economy

Wednesday, 18 March, 2020 - 11:15
An employee arranges sunbathing chairs on a beach near the Hasdrubal Hotel in Hammamet, Tunisia, March 12, 2020. (Reuters)

Tunisian authorities announced they will seek a new financing program tor the country’s economy.

Tunisia struck a deal with the International Monetary Fund (IMF) in December 2016 for a loan program worth around $2.8 billion to overhaul its ailing economy. It included steps to cut chronic deficits and trim bloated public services.

Prime Minister Elyes Fakhfakh has pledged to defend Tunisia’s interests within the new program, stressing that his country “does not accept conditions that do not take its interests into account.”

According to government plans, the country will work over the next five years to radically change the economic system.

Tunisian officials said this change will not be limited to partial reforms that force its economy to be in constant need for IMF financing.

The country has received five out of eight tranches of the fund’s loan, and it still has an opportunity to obtain the sixth, estimated at more than 1.3 billion Tunisian dinars.

It previously lost its opportunity to obtain the seventh and eighth tranches due to its economy’s fluctuating performance.

As part of its current fiscal year budget, Tunisia needs about 11 billion dinars (about $3.6 billion) of funds, whether internal or external.

It may be forced to approve a supplementary financial law in H1 2020 to overcome the huge shortfall in financial resources from the tourism sector and various commercial operations.

The Finance Ministry expected to achieve a growth rate in a range of 1.5 percent in 2020.

However, the coronavirus outbreak and the decline in a number of economic activities, such as in the tourism and transport sectors, may reduce these expectations to the limits of one percent in the best case scenario.

According to a number of experts, this would put authorities in an uncomfortable position while trying to negotiate again with the international financing organizations.

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