Tunisia ready for “decisive action” on economy, IMF says

TUNIS: The International Monetary Funds says Tunisia is committed to “decisive action” to reform its economy before the IMF reviews the payment of its next loan tranche.
Last year, the Washington-based IMF agreed a four-year loan program worth about $2.8 billion with Tunisia, but tied to economic reforms.
Tunisia has been hit by a sharp fall in tourism revenues and fresh foreign investment because of militant attacks in 2015 and overall turmoil since the 2010 overthrow of long-time ruler Zine El Abidine Ben Ali.
“Building on their ambitious budget law for 2018, the Tunisian authorities have expressed their commitment to take decisive action,” the IMF said in a statement late on Wednesday after a visit of a delegation to Tunis.
“The main challenge for the months ahead is to make-up for the significant delays in lifting long-standing obstacles to growth and addressing large fiscal and external deficits,” it said.
Economic Reforms Minister Taoufik Rajhi told Reuters the staff-level deal reached with the IMF delegation opened the door to the third loan installment.
“It confirms the reform paths followed by the government,” he said.
The IMF has been pressing Tunisia to reduce the public wage bill — at almost 15 percent of GDP one of the world’s highest — and energy subsidies, which it said were “disproportionately” benefiting the rich.
Both cuts would be targetted at reducing the deficit.
In the 2018 budget, Tunisia plans cut its budget deficit to 4.9 percent of gross domestic product in 2018, down from about 6 percent expected in 2017, officials have said.
The IMF said it supported efforts by Tunisia to get removed from a blacklist of 17 jurisdictions imposed by the European Union this month on what the bloc deemed to be tax havens.
The decision shocked the North African country with analysts warning it will undermine badly needed investment and efforts to secure $3 billion in foreign loans to fund its budget next year.
In April, the IMF agreed to release a delayed $320 million tranche of Tunisia loans.
Tunisia wants to reduce the public workforce by 20,000 from 800,000 via voluntary redundancies but will go ahead with a wage increase for public servants in 2018 as agreed with powerful labor unions.