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Tunisia Govt, UGTT Union Sign Deal on Economic Reforms

Tunisia's Prime Minister Hichem Mehcichi. (AFP file photo)
Tunisia's Prime Minister Hichem Mehcichi. (AFP file photo)
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Tunisia Govt, UGTT Union Sign Deal on Economic Reforms

Tunisia's Prime Minister Hichem Mehcichi. (AFP file photo)
Tunisia's Prime Minister Hichem Mehcichi. (AFP file photo)

Tunisia's government and the powerful UGTT labor union signed an economic reform package on Wednesday that tackles subsidies, taxes and state firms, Prime Minister Hichem Mehcichi said.

The deal, which comes as Tunisia grapples with unprecedented financial problems, could open the way for an agreement with the International Monetary Fund.

"It is a historic agreement on important battles in our country," Mechichi said.

The agreement includes a plan to start reforms for seven state companies, including Tunisair and the STEG Electricity Company.

Details of the reforms plan will be unveiled later.

The IMF urged Tunisia to cut its wage bill and limit energy subsidies to reduce a fiscal deficit, putting more pressure on the government amid a severe financial and political crisis.

"A very good step that shows that we are the ones who choose our reforms and agree on them without anyone dictating them to Tunisia," Finance Minister Ali Kooli told Reuters.

Kooli said that a Tunisian delegation would start discussions with the IMF over a financing program in two weeks, adding that reaching a deal with IMF would improve Tunisia's credibility and allow it to mobilize foreign loans.

Tunisia’s 2021 budget forecasts borrowing needs of $7.2 billion, including about $5 billion in foreign loans. It puts debt repayments due this year at 16 billion dinars ($5.75 billion), up from 11 billion dinars in 2020.

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Half of Yemen’s Population Face Mounting Risks from Climate Change

Al-Garehi Al-Gharbi camp in the Abs district of north-west Yemen. (Norwegian Refugee Council)
Al-Garehi Al-Gharbi camp in the Abs district of north-west Yemen. (Norwegian Refugee Council)
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Half of Yemen’s Population Face Mounting Risks from Climate Change

Al-Garehi Al-Gharbi camp in the Abs district of north-west Yemen. (Norwegian Refugee Council)
Al-Garehi Al-Gharbi camp in the Abs district of north-west Yemen. (Norwegian Refugee Council)

Already suffering from a prolonged conflict as a result of the Houthi coup against the legitimate authority, Yemen is facing mounting risks brought on by climate change, the World Bank warned on Thursday.
Many populations are facing threats from climate change, such as extreme heat, drought, and floods, the WB said in its newly released Yemen Country Climate and Development Report (CCDR).
Stephane Guimbert, World Bank Country Director for Egypt, Yemen and Djibouti said that Yemen is facing an unprecedented convergence of crises — conflict, climate change, and poverty.
He called for immediate and decisive action on climate resilience, a matter of survival for millions of Yemenis.
“By investing in water security, climate-smart agriculture, and renewable energy, Yemen can safeguard human capital, build resilience and lay the foundations for a path to sustainable recovery,” he said.
The WB report said half of Yemenis are already exposed to at least one climate hazard — extreme heat, drought, or flooding — with compounding effects on food insecurity and poverty.
These risks, it showed, are expected to intensify without immediate action and Yemen’s annual GDP could decline by an average of 3.9% by 2040 under pessimistic climate scenarios, largely due to decreased agricultural productivity and infrastructure damage.
Navigating Challenges
Despite these challenges, the CCDR identifies strategic opportunities to strengthen resilience, improve food and water security, and unlock sustainable growth, the WB report noted.
For example, it said, targeted investments in water storage and groundwater management, coupled with adaptive agriculture techniques could lead to productivity gains of up to 13.5% in crop production under optimistic climate scenarios for the period of 2041 to 2050.
The report also spoke about risks to the fisheries sector, considered as a critical source of livelihood for many Yemenis.
Its projections indicate a potential decline of up to 23% in fish stocks due to rising sea temperatures and altered marine ecosystems.

The WB report also said that climate change exacerbates existing health challenges in Yemen, leading to increased healthcare costs and strain on already fragile health systems.
“It is projected that climate-related health issues could cost the country over $5 billion in excess health costs by 2050,” it noted.
“Addressing these challenges requires integrating climate resilience into public health planning, with a focus on vulnerable groups such as women and children.”
Concerning infrastructure, the report said urban areas and critical infrastructure are especially vulnerable, and without adaptation measures, economic shocks will disproportionately affect already fragile communities.
As for the private sector, it has a critical role to play in addressing Yemen’s pressing development challenges, said Khawaja Aftab Ahmed, IFC’s Regional Director for the Middle East.
“Harnessing its potential through innovative financing mechanisms and guarantee instruments and creating a conducive investment climate can help mobilize the climate-focused funding the country urgently needs to build a greener and more resilient future,” he said.
The WB report also said that Yemen also has immense potential for renewable energy, which could serve as a key component of its climate response and recovery.
It showed that harnessing renewable energy resources not only offers a pathway to reduce reliance on fossil fuels but also enables the creation of a more resilient power infrastructure.
“This will be essential in supporting vital services such as healthcare, water supply, and food distribution, particularly in conflict-affected areas,” it said.
Global Coordination
The World Bank highlighted the significant commitments and coordination from the international community to support Yemen in coping with climate shocks and building broader resilience.
It said securing sustainable peace will be required to unlock the financing and take the action needed to build long-term resilience to climate change.
The CCDR then underscored the importance of flexible, risk-informed decision-making to adapt climate actions to Yemen's uncertain political landscape.
Under a “Peace and Prosperity” scenario, it said, a higher level of adaptation can be implemented, yielding greater economic and social benefits.
Yemeni Minister of Water and Environment, Tawfiq Al-Sharjabi, stressed the importance of integrating climate action into development strategies and adapting to climate fluctuations.
The minister was speaking at a special session to discuss the WB report on the sidelines of the 29th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP29) held in Baku, Azerbaijan.
He said the report represents a significant contribution for Yemen in addressing climate change and will facilitate access to various climate financing options amid the structural and technical fragility faced by institutions due to the war.
The report, Al-Sharjabi added, aligns closely with Yemen's urgent priorities, particularly in the areas of water and food security, enhancing livelihoods, and promoting area-based climate adaptation approaches.