Tunisia Sees IMF Deal Within Three Months as Proposals Presented
Tunisia expects to agree on a new program with the International Monetary Fund within three months, Finance Minister Ali Kooli said, as talks continue on reforms for the country’s troubled economy.
Discussions are continuing on the size of any loan the Washington-based lender may provide, Kooli said in a phone interview.
IMF officials have responded positively to reforms proposed by Tunisia, describing them as “realistic” and “applicable,” he said, without giving specifics on the steps envisaged. A document obtained by Bloomberg shows Tunisia is discussing phasing out subsidies and trimming the public wage bill.
The birthplace of the Arab Spring uprisings, Tunisia has struggled to achieve political consensus in the decade since President Zine El-Abidine Ben Ali was forced from power. The instability has hampered efforts to reduce youth unemployment and corruption, key drivers of the revolt, while repeated terrorist attacks had slowed the crucial tourism industry even before the Covid-19 pandemic depressed global travel.
Tunisia is considering the gradual removal of subsidies on food, electricity and natural gas by 2024, replacing them with direct cash transfers for the neediest, according to the confidential document written by the government and central bank that says it includes recommendations from lawmakers, the largest trade union, business leaders and civil society.
The document’s proposals will be subject to further discussions, it says. Also being mulled is a voluntary redundancy campaign that would help cut the government’s wage bill to 15% of gross domestic product from 17.4% in 2020.
Kooli declined to comment when asked about the document.
Other proposals detailed include:
- Establishing a debt-management agency as part of drive to achieve a positive primary balance from 2022
- Restructuring the debt of publicly owned companies and boosting their capital
- Total removal of subsidy of liquefied petroleum gas in the second half of 2021, a fuel widely used for heating and power generation
- Introducing cross-currency and interest rate swaps to diversify risk management tools, including on the Tunisian dinar
- A new tax on real estate
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