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Ed Webb

Analysis: Tunisia faces rising pressure, record IMF delay over lack of reforms | Reuters - 0 views

www.reuters.com/...y-over-lack-reforms-2023-10-09

Tunisia economy analysis IMF EU KSA Saudi saied Italy migration tourism foodsecurity

shared by Ed Webb on 09 Oct 23 - No Cached
  • Tunisia reached a preliminary deal with the International Monetary Fund a year ago on a $1.9 billion loan programme, but 12 months later it has yet to receive any money and seems unwilling to implement the reforms needed to do so.
  • The one-year lag is a record delay between a preliminary deal and the final signoff, according to public data on over 80 cases compiled by Reuters. This compares to the median 55 days it took low- and middle-income countries between the two steps, and exceeds even the long waits of countries like Chad, Zambia and Sri Lanka.
  • Reducing the budget deficit, reforming large state-owned enterprises and devaluing the currency to prevent the central bank from using reserves to support the dinar are among the top tasks the government needs to address,
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  • Talks on the IMF 48-month arrangement have been in limbo after Saied rejected terms including cutting subsidies and reducing the public wage bill, saying the "diktats" laid down by the international lender were unacceptable.
  • The World Bank recently cut its Tunisian economic growth forecast to 1.2% from 2.3% for 2023 citing "very uncertain prospects" over debt financing and difficult conditions following a three-year drought that has pushed the government to raise tap water prices and threatened food security.
  • "rising reserves and marginal fiscal consolidation have granted Tunisia some additional runway" thanks to a pickup in tourism
  • Tunisia also received $500 million of fresh funding from Saudi Arabia in July. A $1 billion European Union pledge of support is, however, conditional on Tunisia receiving an IMF programme.
  • has to pay back a 500 million euro bond maturing in October and an 850 million euro note due in February
  • Tunisia can nevertheless count on support from some other nations under pressure thanks to its geopolitical and geographic importance, according to analysts.Italian Prime Minister Giorgia Meloni maintains a close relationship with Tunisia. Record numbers of migrants setting off from the country have landed on Italy's far southern island of Lampedusa."Meloni is a staunch supporter of Tunisia because of the migration issue and that gives them more space to delay things,"
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