IMF Calls for Structural Economic Reforms in Tunisia

Tunisians buying fruits in Tunis (File photo: Reuters)
Tunisians buying fruits in Tunis (File photo: Reuters)
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IMF Calls for Structural Economic Reforms in Tunisia

Tunisians buying fruits in Tunis (File photo: Reuters)
Tunisians buying fruits in Tunis (File photo: Reuters)

The International Monetary Fund (IMF) mission concluded virtual talks on Tunisia by calling on the authorities to implement structural economic reforms.

Tunisian sources reported that the Fund stressed the need to reduce subsidies on essential goods such as petrol and staple foods, adding that state resources should be invested in education, health, and infrastructure.

IMF representatives conducted virtual discussions between Feb. 14 and 22 with Finance Minister Sihem Boughdiri, Central Bank Governor Marouane Abbasi, and concerned officials to implement needed economic reforms.

The IMF mission held extensive meetings over a week with the officials and ministers to reach an agreement on the financial support program between the two parties.

However, evidence and the few statements issued after the sessions were discouraging, indicating difficulty reaching an agreement.

The Tunisian authorities did not adhere to the Fund's recommendations and conditions.

Meanwhile, the IMF will hold another meeting to determine its position on the Tunisian financial program.

It called on the Tunisian authorities to implement reforms on subsidiaries, urging for better control on wages of state employees. These demands could complicate negotiations between the two parties, given the possibly severe repercussions on the social and economic levels.

The sessions touched on the need to reduce the fiscal deficit at the state budget level, enhance tax fairness, encourage the participation of the private sector in investment, and implement wide-ranging reforms for public institutions, most of which suffer from severe financial difficulties.

Minister of Economy Samir Said denied reports claiming subsidies would be canceled in Tunisia, despite it being one of the IMF's primary conditions for financing the Tunisian economy and obtaining a financial loan of about $4 billion.

IMF envoy to Tunisia Jerome Vacher confirmed that Tunis sought international funding after the economic recession, which reached unprecedented levels.

Vacher described the situation as the "worst recession since independence" in 1956.

"The country had pre-existing problems, in particular budget deficits and public debt, which have worsened," he said.

Its GDP plunged by almost nine percent in 2020, the worst rate in North Africa, only modestly offset by a three percent bounce back last year.

That is "quite weak and far from enough" to create jobs to counteract an unemployment rate of 18 percent, Vacher said.



Oil Prices Steady as Markets Weigh Demand against US Inventories

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
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Oil Prices Steady as Markets Weigh Demand against US Inventories

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)

Oil prices were little changed on Thursday as investors weighed firm winter fuel demand expectations against large US fuel inventories and macroeconomic concerns.

Brent crude futures were down 3 cents at $76.13 a barrel by 1003 GMT. US West Texas Intermediate crude futures dipped 10 cents to $73.22.

Both benchmarks fell more than 1% on Wednesday as a stronger dollar and a bigger than expected rise in US fuel stockpiles pressured prices.

"The oil market is still grappling with opposite forces - seasonal demand to support the bulls and macro data that supports a stronger US dollar in the medium term ... that can put a ceiling to prevent the bulls from advancing further," said OANDA senior market analyst Kelvin Wong.

JPMorgan analysts expect oil demand for January to expand by 1.4 million barrels per day (bpd) year on year to 101.4 million bpd, primarily driven by increased use of heating fuels in the Northern Hemisphere.

"Global oil demand is expected to remain strong throughout January, fuelled by colder than normal winter conditions that are boosting heating fuel consumption, as well as an earlier onset of travel activities in China for the Lunar New Year holidays," the analysts said.

The market structure in Brent futures is also indicating that traders are becoming more concerned about supply tightening at the same time demand is increasing.

The premium of the front-month Brent contract over the six-month contract reached its widest since August on Wednesday. A widening of this backwardation, when futures for prompt delivery are higher than for later delivery, typically indicates that supply is declining or demand is increasing.

Nevertheless, official Energy Information Administration (EIA) data showed rising gasoline and distillates stockpiles in the United States last week.

The dollar strengthened further on Thursday, underpinned by rising Treasury yields ahead of US President-elect Donald Trump's entrance into the White House on Jan. 20.

Looking ahead, WTI crude oil is expected to oscillate within a range of $67.55 to $77.95 into February as the market awaits more clarity on Trump's administration policies and fresh fiscal stimulus measures out of China, OANDA's Wong said.