IMF gives long-term aid to Tunisia

The IMF at the weekend approved a 48-month arrangement under an extended fund facility with Tunisia for an amount equivalent to about US$2.9 billion to support the country’s economic and financial reform programme detailed in the authorities’ economic blueprint.

The programme aims to promote stronger and more inclusive growth by consolidating macroeconomic stability, reforming public institutions including the civil service, facilitating financial intermediation and improving the business climate.

The IMF decision frees up about $319.5 million for immediate disbursement; the remaining amount will be phased in over the duration of the programme, subject to regular reviews.

The news comes after the World Bank approved a five-year plan to lend Tunisia up to $5bn to support economic reforms aimed at reviving growth and creating jobs.The North African country is struggling with lower tourism revenue after militant attacks last year, protests over unemployment and slow progress on economic reforms that have lagged political advances made since its 2011 uprising.

After the IMF decision on Tunisia, Mitsuhiro Furusawa, the fund’s deputy managing director and acting chairman, said: “Tunisia’s economy has shown resilience but continues to face important fiscal, external, structural and social challenges. Macroeconomic stability has been preserved and important reforms have been initiated, including with the support of the recently expired IMF-supported programme. “Strong commitment to sound policies, early and decisive action on key structural reforms and consensus-building and communication efforts, particularly on socially difficult reforms, are crucial to create jobs and yield the largest gains for Tunisia’s population.

“A prudent fiscal policy that puts public debt on a downwards path will ease financing constraints, reduce external imbalances and ensure sustainability. A comprehensive civil service reform will improve public service delivery and increase fiscal space for priority investment and well-targeted social spending. A more progressive and efficient tax system will broaden the tax base and improve equity. Fiscal risks should continue to be monitored; and governance efforts, accelerated,” Mr Furusawa said.

Tunisia’s parliament recently approved laws on banking and on strengthening central bank autonomy to shield its board from political interference, two reforms sought by the country’s international lenders.

“Enhanced central bank independence will strengthen the effectiveness of monetary policy, while greater exchange rate flexibility will strengthen reserve buffers and facilitate external adjustment,” Mr Furusawa said.

“The adoption of critical banking sector legislation is welcome. Further action is needed to restructure public banks and strengthen the banking resolution and supervision frameworks. Developing credit bureaus and relaxing caps on lending rates will increase access to finance.

“Efforts to streamline existing business procedures and enhance market access through a new investment code and the implementation of the competition law and the law on public-private partnerships are essential to promote private-sector development and create jobs.”

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