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Tunisia tourism could lose $1.4 billion, govt seeks loan guarantee to issue bonds

April 15, 2020 at 7:38 am

Passengers stranded at Tunis Carthage airport wait for flights on 16 March 2020 [FETHI BELAID/AFP via Getty Images]

Tunisia’s vital tourism sector could lose $1.4 billion and 400,000 jobs this year due to the new coronavirus pandemic, an official document showed, as the country seeks a loan guarantee from bilateral partners to issue sovereign bonds this year.

In a letter sent to the International Monetary Fund (IMF) that was reviewed by Reuters, Tunisia’s central bank governor and finance minister said the country’s economy will shrink by up to 4.3%, the steepest drop since independence in 1956.

The IMF, which approved on Friday a $745 million loan to Tunisia to counter the effects of the coronavirus, said a new funding programme with Tunisia could start in the second half of this year. The size of the new programme remains unknown.

READ: Tunisia government given special powers to handle coronavirus crisis

The North Africa country has confirmed 747 cases of the virus and 34 deaths, and last month imposed a lockdown set to last until at least April 19. The outbreak is hammering its tourism sector which represents nearly 10% of gross domestic product (GDP) and is a key source of foreign currency.

“We are working with partner governments on a potential guarantee for future sovereign bond issuances in the currently difficult international context,” the central bank governor and finance minister wrote in their letter.

The IMF said that the fiscal deficit in Tunisia will rise to 4.3% of GDP this year, compared to 2.8% originally expected, due to the need for extraordinary expenditures over this crisis.

As part of its 2020 budget, Tunisia plans to issue bonds worth up to 800 million euros ($877 million), but officials have not given any details or date for the issue.