Tunisia Meets the IMF: What's at Stake?

Girls walk past a closed souvenir shop in El Jem, amid the coronavirus disease (COVID-19) outbreak, Tunisia, May 20, 2021. REUTERS/Angus McDowall
Girls walk past a closed souvenir shop in El Jem, amid the coronavirus disease (COVID-19) outbreak, Tunisia, May 20, 2021. REUTERS/Angus McDowall
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Tunisia Meets the IMF: What's at Stake?

Girls walk past a closed souvenir shop in El Jem, amid the coronavirus disease (COVID-19) outbreak, Tunisia, May 20, 2021. REUTERS/Angus McDowall
Girls walk past a closed souvenir shop in El Jem, amid the coronavirus disease (COVID-19) outbreak, Tunisia, May 20, 2021. REUTERS/Angus McDowall

Tunisia and the International Monetary Fund are in preliminary talks, with an eye on a potential multi-billion-dollar rescue deal for an economy plagued by recession, public debt, inflation and unemployment.

The North African nation on Monday started talks with the Washington-based crisis lender, which has called for "deep reforms" and public spending cuts.

But many Tunisians, already struggling to make ends meet, fear a deal that involves painful reforms could leave them much worse off.

Why is Tunisia seeking a new loan?

Tunisians have endured a decade of economic stagnation since the revolt in early 2011.

Two previous IMF loan deals, for $1.7 billion in 2013 and a further $2.8 billion in 2016, have done little to fix the country's public finances.

The coronavirus pandemic put the economy on life support, with a deep recession that sent 80,000 small and medium-sized firms into bankruptcy or out of the country since early 2020, according to official data.

Over the same period, unemployment has surged from 15.1 to 18.4 percent and inflation has eaten away at people's buying power.

Since the revolution, per capita GDP has dropped by a fifth and the dinar has fallen by 40 percent against other currencies.

But economist Ezzedine Saidane said Tunisia's biggest challenge is its burgeoning public debt.

"Public debt is at an unprecedented level, over 100 percent of gross domestic product," he told AFP.

A western diplomat in Tunis told AFP on condition of anonymity that Tunisia was borrowing to pay public sector salaries.

That has weighed on Tunisia's credibility as a borrower internationally, Saidane said.

Moody's ratings agency in October downgraded Tunisian debt to Caa1 from B3, warning the country could slide towards default.

"Tunisia will inevitably have to go through the IMF to rebuild some of its credibility in order to mobilize resources from overseas," Saidane added.

What is the IMF likely to demand?

The IMF has publicly voiced concern over Tunisia's budget deficits and in particular its public sector wage bill.

"It's an economy that needs very deep, structural reforms, especially to improve the business environment," the lender's outgoing Tunisia envoy Jerome Vacher told AFP last month.

The IMF, which has a record of demanding painful cuts to public spending, is likely to condition a loan on slashing the state's wage bill, which Vacher said is one of the highest in the world relative to the size of the economy.

More than half of public spending goes on paying the salaries of around 650,000 public servants in the country of 12 million.

On top of that, Tunisia's sprawling public companies employ at least 150,000 people at the taxpayer's expense -- money the IMF says could fund education, health and infrastructure.

The lender is also likely to demand an end to subsidies on energy, with some funds instead distributed directly to the poorest families as cash.

What are the main obstacles to a deal?

Cutting public spending will be tough for authorities to sell to the Tunisian public.

President Kais Saied, who last July sacked the government and seized wide-ranging powers, had widespread support -- and retains some -- for his efforts to "cleanse" the dysfunctional and corrupt system that followed the 2011 revolt.

But Romdhane Ben Amor of the Tunisian Forum for Economic and Social Rights warned that "no political actor can get away with removing subsidies".

He said many subsidized goods -- such as cooking oil -- were getting harder to find and that public services, particularly health and education, were already decrepit.

"You're telling me the solution is to cut even more?" he asked.

Tunisia's powerful UGTT trade union confederation, which has a long history of resistance to outside interference, is expected to push back hard against IMF efforts to impose austerity.

Monica Marks, a Tunisia expert at New York University in Abu Dhabi, said Saied would face a tough balancing act.

"On the one hand, he needs to placate the UGTT by staving off IMF-backed austerity policies like subsidy cuts and hiring or salary freezes," she said.

"On the other, if he refuses to play ball with the IMF, Tunisia might not secure a loan -- and could drop off an even steeper cliff than it's already fallen off of financially."

But, she warned: "Saied lacks any semblance of an economic plan".



Oil Falls as Trump Comments on Iran Talks Ease Supply Concerns

FILE PHOTO: A drone view shows the Portuguese flagged oil and chemical tanker ship CB Pacific docked at the Moran Shipping Agencies’ Citgo Petroleum Quincy/Braintree Terminal, March 18, 2026. REUTERS/Brian Snyder/File Photo
FILE PHOTO: A drone view shows the Portuguese flagged oil and chemical tanker ship CB Pacific docked at the Moran Shipping Agencies’ Citgo Petroleum Quincy/Braintree Terminal, March 18, 2026. REUTERS/Brian Snyder/File Photo
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Oil Falls as Trump Comments on Iran Talks Ease Supply Concerns

FILE PHOTO: A drone view shows the Portuguese flagged oil and chemical tanker ship CB Pacific docked at the Moran Shipping Agencies’ Citgo Petroleum Quincy/Braintree Terminal, March 18, 2026. REUTERS/Brian Snyder/File Photo
FILE PHOTO: A drone view shows the Portuguese flagged oil and chemical tanker ship CB Pacific docked at the Moran Shipping Agencies’ Citgo Petroleum Quincy/Braintree Terminal, March 18, 2026. REUTERS/Brian Snyder/File Photo

Oil prices fell on Friday as Middle East supply concerns eased after US President Donald Trump said the country would not attack Iran before US elections next month, amid productive talks to end their war that has disrupted global energy markets.

Brent crude futures dropped $1.68, or 1.61%, to $102.6 a barrel by 0819 GMT. US West Texas Intermediate (WTI) crude futures fell $1.31, or 1.43%, to $90.18, Reuters reported.

On a weekly basis, Brent prices are set to rise after settling 4% higher on Thursday, while WTI is set for a slight decline.

The US President’s pledge not to renew military attacks on Iran before the midterm elections along with China’s resumption of product exports were moving prices lower, PVM Oil Associates analyst Tamas Varga said.

Yet, the escalation of atrocities in ⁠the Arabian Gulf ⁠and around the Red Sea “has dashed hopes that swelling oil exports from the region will be sustainable and, as such, a protracted fall in oil prices in the foreseeable future seems implausible."

On Thursday, Trump said Washington was having "productive discussions" with Iran and said no attack was planned before the November 3 midterm congressional elections after media reports that he was considering an attack before then.

Iran's Tasnim news agency reported the same day ⁠that Foreign Minister Abbas Araqchi said Tehran is reviewing the US response to its proposal that would reopen the Strait of Hormuz within seven days.

"The prospect of easing tensions still needs to be reinforced by concrete progress in negotiations and improvements in shipping safety through the Strait of Hormuz," said XS.com analyst Linh Tran.

The US is still pressuring Iran economically to try to end the war, now in its eighth month, imposing sanctions on Thursday targeting individuals, networks and 17 vessels for transporting Iranian crude, oil products and petrochemicals.

Prices have been volatile this week as threats to shipping in the Gulf and the Strait of Hormuz, which carried shipments equal to about 20% of global ⁠oil and fuel ⁠before the war, have increased in October.

The Middle East war and the conflict between Russia and Ukraine have disrupted supplies of refined fuels such as gasoline, jet fuel and especially diesel fuel.

The oil market is also contending with Hurricane Isaias in the Gulf of Mexico. Because of the storm, producers there have shut in about 1.3 million barrels per day, or 62.9%, of current oil production as of Thursday, according to the US Marine Minerals Administration.

"This disruption provides additional support for oil prices, but the duration of its impact will depend on post-storm facility inspections and the pace of operational recovery," Tran said.


London Copper Rises on Supply Risks, China Buying

Stacks of copper cathodes sit inside Glencore's Canadian Copper Refinery in Montreal, Quebec, Canada on October 3, 2026. (Photo by ANDREJ IVANOV / AFP)
Stacks of copper cathodes sit inside Glencore's Canadian Copper Refinery in Montreal, Quebec, Canada on October 3, 2026. (Photo by ANDREJ IVANOV / AFP)
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London Copper Rises on Supply Risks, China Buying

Stacks of copper cathodes sit inside Glencore's Canadian Copper Refinery in Montreal, Quebec, Canada on October 3, 2026. (Photo by ANDREJ IVANOV / AFP)
Stacks of copper cathodes sit inside Glencore's Canadian Copper Refinery in Montreal, Quebec, Canada on October 3, 2026. (Photo by ANDREJ IVANOV / AFP)

London copper rose on Friday, recovering from the previous session's loss, as mine disruptions and buying in top consumer China supported prices.

Benchmark three-month copper on the London Metal Exchange was up 1.16% at $14,475 a metric ton by 0700 GMT, after dropping 1.15% in the previous session. It has climbed 1.52% so far this week, Reuters reported.

The most-traded copper contract on the Shanghai Futures Exchange fell 0.57% to 110,110 yuan a ‌ton, tracking overnight ‌losses in London.

"Copper is near record ‌levels, ⁠supported by supply-side issues," ⁠Daniel Hynes, senior commodity strategist at ANZ, said in a note.

The Yangshan copper premium <SMM-CUYP-CN> - a gauge of China's appetite for imported copper - ose to $125 a ton, its highest since November 2022, on Thursday, when China returned from a week-long holiday.

Copper in SHFE-monitored warehouses <CU-STX-SGH> increased by ⁠20,000 tons (51.6%) during the shortened week, but ‌stocks at 58,744 tons nonetheless ‌remain thin.

A workers' union at Antofagasta's Centinela copper mine in ‌Chile said their ongoing strike would begin to ‌weigh on outputin November. Antofagasta earlier downplayed the impact of the strike.

Disruptions at other mines added to already heightened supply risk, while stocks outside the US have fallen as copper has ‌been pulled into the country ahead of potential tariffs on refined copper imports.

The dollar ⁠index, ⁠which measures the greenback against a basket of other currencies, nudged lower. Oil prices also edged down on Friday.

Both had earlier in the week weighed on industrial metals.

A stronger dollar makes commodities more expensive for buyers using other currencies, while elevated energy prices threaten to stoke inflationary concerns and weigh on economic activity.

Among LME metals, aluminium gained 0.79%, zinc gained 1.25%, lead gained 0.7%, nickel gained 0.66% and tin gained 0.96%.

On the SHFE, aluminium lost 0.49%, zinc lost 1.12%, lead lost 1.45%, nickel lost 0.38% and tin dropped 4.23%.


China and EU Trade Envoys Seek Ways to Ease Tensions over Growing Imbalances

EU and Chinese flags are seen in this illustration taken, March 20, 2025. REUTERS/Dado Ruvic/Illustration
EU and Chinese flags are seen in this illustration taken, March 20, 2025. REUTERS/Dado Ruvic/Illustration
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China and EU Trade Envoys Seek Ways to Ease Tensions over Growing Imbalances

EU and Chinese flags are seen in this illustration taken, March 20, 2025. REUTERS/Dado Ruvic/Illustration
EU and Chinese flags are seen in this illustration taken, March 20, 2025. REUTERS/Dado Ruvic/Illustration

The top trade envoys for China and the European Union were wrapping up two days of talks Friday aimed at calming escalating tensions over growing imbalances between the two giant economies.

EU trade chief Maros Sefcovic traveled to Beijing saying it was crucial that the negotiations deliver “tangible outcomes” in rebalancing trade between China and the 27-nation bloc.

It was unclear, however, if the two sides would find the will to resolve key factors behind China’s growing trade surplus, which hit 360 billion euros ($410 billion) last year.

China is pushing for the EU to stop blocking its imports of advanced computer chipmaking machines, restrictions imposed on national security grounds at Washington's behest.

Sefcovic said the talks this week were the culmination of three months of intensive work. He had set an October deadline for meaningful results on trade rebalancing.

Earlier in the week, the Chinese Commerce Ministry issued a statement urging the EU to avoid protectionist measures, warning that such moves could backfire.

Trade tensions have grown in recent months, with both sides imposing or considering curbs on each other’s imports.

The EU has moved to limit imports of Chinese-made electric vehicles and EV batteries and enacted measures to protect the European steel industry. It also is limiting duty-free imports of e-commerce small parcels, essentially targeting Chinese fast fashion firms.

Last week, China launched an anti-dumping investigation into imports from the EU of p-nitrotoluene, a chemical compound used in dyes and pharmaceuticals.

Chinese officials and businesses have raised concerns over reports some EU members are pushing for new measures to protect local industries.

Worries over surging Chinese exports to Europe and other parts of the world in what some are calling a China shock 2.0 have deepened as the US, especially since President Donald Trump returned to the White House, has raised tariffs and enacted other measures to try to reduce its own huge trade deficit with Beijing.

Despite the backlash from some of its trading partners, China's global trade surplus hit $1.2 trillion in 2025 and is forecast to surpass $1 trillion again this year.

The EU's trade deficit with China widened to 103.34 billion euros (about $116 billion) in the April-July quarter, as imports rose to 153.63 billion euros ($172.3 billion) ,while European exports to China climbed to 50.3 billion euros ($56.4 billion), according to EU statistics.