Tunisia in Transition Preps for IMF Visit as Funding Needs Rise
Tunisia in Transition Preps 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 delegation to discuss budget issues while planning to increase foreign borrowing 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.
The IMF visit is an annual one to discuss budget proposals, not to review the Extended Fund Facility, the Washington-based lender said Friday in a statement. The IMF agreed a $2.9 billion loan for Tunisia in 2016, and authorities have been struggling to implement some of the fund’s calls for spending cuts while grappling with social 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 state-run news agency TAP initially reported Wednesday that the visit was related to the IMF program. It quoted Major Reforms Minister Taoufik Rajhi as saying the next IMF review could contain “commitments” by the government “on the choices and reforms to be undertaken.”
Separately, Rajhi told Bloomberg that no decision had been taken on the methods, size or timing of any future 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, Michael Gunn, Hari Govind
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