IMF to discuss with Tunisia plans for fund assistance

The International Monetary Fund has been in contact with Tunisian authorities after a new cabinet was formed last week, and more talks are expected soon on the type of aid required by the financially strapped country, a senior IMF official said.

Tunisia faces the risk of a debt restructuring after struggling to bring its high public debt and fiscal deficits onto a sustainable trajectory, Reuters reporting.

Talks with the IMF for a loan that could unlock bilateral aid from major donors were derailed when President Kais Saied, in July, suspended parliament, sacked the prime minister, and took power in what his opponents called a coup.

Saied unveiled a new government last week but gave no hint on when he would relinquish his near-total control and start reforms needed for a financial rescue package.

READ: Financial flows to Tunisia decreased by 26%, amid rise in debt

“The IMF is closely monitoring the evolving political situation in Tunisia and IMF staff are engaging with the authorities at a technical level”, IMF Middle East and Central Asia Department director, Jihad Azour, told Reuters.

“Our team has been in contact with them after the new cabinet was formed on 11 October … I expect to meet them next week, virtually, in order to discuss what the plans of the new government are, what are the reform priorities and what are their intentions in terms of relationship with the fund.”

Foreign donors want Tunisia to set out a series of credible economic reforms that would potentially reduce subsidies and the public sector wage bill and overhaul loss-making state enterprises, thereby curbing the deficit and debt.

To support the government at the start of the pandemic, the IMF, in April 2020, approved $750 million of emergency funding and, before then, had other funding lines to help support Tunisia since it emerged as the only democracy from the Arab Spring.