IMF and Tunisia strike deal on fifth loan review

Agreement will allow Tunisia to be granted a $247m loan after June this year

People gather during a nationwide strike against the government's refusal to raise wages in Tunis, Tunisia January 17, 2019. REUTERS

The International Monetary Fund reached an agreement with Tunisia on the fifth review of a loan to help the North African state reduce its budget deficit.

As part of the agreement, the IMF will disburse $247 million to Tunisia in line with the $2.8 billion loan programme agreed to in December 2016, which aims to help the country revamp its struggling economy. The programme includes measures to slash budget deficits and overhaul public services.

The latest loan disbursement is intended to help Tunisia meet a budget deficit target of 3.9 per cent of gross domestic product in 2019, from 4.9 per cent in 2018, to contain its escalating debt and financing needs, the Washington-based lender statement said.

The staff-level agreement on the fifth review of the country’s economic reform programme is subject to approval by the IMF’s executive board, said IMF economist Björn Rother, in the statement.

“We had fruitful discussions with the authorities on their economic policy agenda aimed at stabilising and reforming the economy in the months ahead, taking into account the difficult socio-economic situation and the challenging regional environment.”

The $247m award will bring total disbursements under the Tunisia programme to about $1.6bn to date and help unlock additional financing from Tunisia’s other external partners.

During the discussions, Tunisian authorities and IMF officials also agreed on policy and reforms measures to cut the budget deficit, and to strengthen the social safety net for lower income and vulnerable households, Mr Rother added.