March 23, 2023

Tunisia has reached a preliminary agreement with the IMF on a $1.9 billion loan intended to help alleviate the North African economy plagued by food and fuel shortages.

The deal, announced late Saturday and yet to be ratified by the IMF board in December, is expected to open the door to loans from other donors pending reassurances that the heavily indebted country is committed to reforms, which are part of the package. Before the deal, some analysts predicted that Tunis would be unable to meet its debt payments and likely default.

This will be Tunisia’s third agreement with the IMF since 2013, and diplomats have warned in recent months that the country has failed to implement previously agreed reforms. These include cutting subsidies, privatizing state-owned enterprises and cutting civil servants’ wage costs, which are considered some of the highest in the world relative to the size of the economy.

The Tunisian government has “already taken steps to control civil servants’ wage bill and has begun phasing out general wasteful price subsidies,” the IMF said on Saturday.

It said the loan would help Tunisia restore fiscal stability, “improve social protection and promote higher, greener and inclusive growth and private sector-led job creation”.

Elements of Tunisia’s reform program include increasing targeted remittances to the poor and expanding the social safety net for vulnerable families affected by price increases, the IMF said. The government is also committed to reforming state-owned enterprises.

Earlier this month, long lines of cars lined up in front of gas stations as a result of fuel shortages attributed to the central bank’s rationing of foreign exchange.

See also  Can You Get a Title Loan Online in Alabama?

Kais Saied, the president who rules by decree and amended the constitution over the summer to gain expanded powers, has accused speculators and hoarders of stockpiling and manipulating the market to make huge profits.

Until Saied suspended parliament last year, Tunisia was seen as the only example of a successful democratic transition that emerged from the Arab uprisings of 2011. At the time, many Tunisians said they supported his move because the democratic experiment failed to reverse the economic decline. stop and rising prices.

But the country’s economic problems have since worsened, as Russia’s large-scale invasion of Ukraine strained Tunis’s budget by fueling sharp rises in food prices and gasoline imports.

Raw materials such as sugar and vegetable oil are scarce. Recent video footage that went viral showed shoppers crowding each other in a supermarket to confiscate scarce packets of staples.