Tunisia requests $ 4 billion loan from IMF, PM says

Tunisia will seek a $ 4 billion loan program from the International Monetary Fund in talks starting next week, Prime Minister Hichem Mechichi told Reuters on Friday, saying politicians faced a “last chance” to save the economy.

Mechichi said he expected the talks to last around two months and that he was “confident” that Tunisia could secure financial support to help him get through an economic crisis that has been made worse by the pandemic. COVID-19.

“All efforts must be unified in Tunisia because we consider that we have reached the last opportunity and we must use it to save the economy,” he said in an interview.

He said he wanted a three-year loan program and added that details of a deal with powerful unions, seen as key to unlocking foreign funding, were still being finalized.

The finance minister and central bank governor will travel to the United States next week to begin negotiations, Mechichi said, and he will also be there when a deal is in place.

He said Tunisia would rationalize rather than cut subsidies and said it was considering selling minority shares it owns in some companies in order to raise funds to invest in larger state-owned companies.

The IMF has previously said Tunisia should target urgent reforms of state-owned enterprises, subsidies and the large public sector wage bill.

Tunisia, which embraced democracy after its 2011 revolution, suffered years of economic stagnation, declining public services and worse living standards even before the pandemic, causing widespread anger and frustration. Protests took place across the country in January.

“ RADICAL DECISION ”

The tourism sector, responsible for about a tenth of the Tunisian economy, has been disrupted by the pandemic and with the slow rollout of vaccines, the government recently introduced new restrictions on international travel.

But Mechichi said this summer’s tourist season was not already lost and the government would develop protocols to keep visitors safe. He said Tunisia has yet to review vaccine passports, but may consider them.

Mechichi had previously rejected another lockdown after one imposed last spring, saying Tunisia could not afford it. His announcement this month to extend the curfew met with broad opposition and he quickly relaxed the measures.

He did indicate in the interview, however, that he could be open to a new lockdown if necessary. “If the situation prompts us to take a radical decision, we will take it,” he said.

Although Tunisia has been feted by Western governments for its democratic transition, international lenders have pushed it to adopt painful economic reforms to reduce chronic budget deficits and large sovereign debt.

The powerful UGTT union has opposed some of the reforms lenders are seeking and recently said it wants the government to raise wages even though Tunisia has one of the biggest public sector wage burdens in the world.

Efforts to agree on a reform agenda accepted by both unions and lenders have been hampered by years of political wrangling between the government, the elected president and a deeply fragmented parliament.

“I am well aware that some reforms are unpopular … we will only strive to do what saves the economy from collapse,” Mechichi said.

Our Standards: Thomson Reuters Trust Principles.


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