Tunisia in Transition Braces for IMF Visit as Funding Needs Rise
Tunisia in Transition Braces for IMF Visit as Funding Needs Rise
(Bloomberg) -- Tunisia’s turbulent political scene faces a new potential obstacle, as the government prepares to receive an IMF mission to discuss its economic program while also planning to raise external financing by about 10%.
The International Monetary Fund’s mission is slated to begin Oct. 8, five days before a tightly contested presidential run-off vote between two political outsiders. Around the same time, parliament is due to start discussing a draft budget for 2020.
That document will likely be a key issue for the IMF before it approves the next installment of a $2.9 billion loan it extended to Tunisia in 2016. The government has butted heads with the Washington-based lender over enacting its program before, as it tries to balance spending cuts with keeping a lid on discontent spurred by issues such as high youth unemployment.
Economic growth slowed to 1.1% in the first six months of 2019, less than half the pace of expansion during the same period the year before. Tunisia’s 2011 ouster of then-leader Zine El Abidine Ben Ali was the spark for the Arab Spring that roiled the region, but the subsequent failures of nine consecutive governments paved the way for the drubbing of veteran politicians in last month’s presidential elections.
Under the draft budget, the North African country will require 8.8 billion dinars ($3.1 billion) in external financing and another 3 billion dinars in domestic funding, according to an official familiar with the government’s plans. The official spoke on condition of anonymity because the figures have yet to be made public. External financing needs were 8 billion dinars in 2019.
The next review could contain “commitments” by the government “on the choices and reforms to be undertaken,” Major Reforms Minister Taoufik Rajhi was quoted as saying by the state-run TAP news agency. “The sixth review is necessary to ensure the financing of the 2020 budget.”
Separately, Rajhi told Bloomberg that no decision had been taken on the methods, size or timing of the potential external funding. Tunisia sold 700 million euros ($766 million) in international bonds in July.
Previous run-ins between the government and IMF have resulted in the delay of the payout of at least one loan installment, further squeezing the country’s finances and leaving it for a time with reserves to cover less than three months of imports.
To contact the reporter on this story: Jihen Laghmari in Cairo at jlaghmari@bloomberg.net
To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net, Tarek El-Tablawy, Michael Gunn
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