Tunisia: Financial crisis will worsen if no IMF deal is made

The Central Bank of Tunisia acknowledged the difficult financial situation the country is facing, adding that it expects the crisis to increase if no agreement is reached with the International Monetary Fund (IMF).

Governor of the Central Bank of Tunisia, Marouane Abassi, said the rate of economic growth this year will be in the range of 1.8 per cent, confirming that Tunisia is witnessing a high rate of inflation that coincides with an increase in the budget deficit.

He predicted that “Tunisia will witness a very difficult year if a final agreement with the IMF is not quickly reached.”

Tunisia is awaiting final approval of a loan from the IMF that will allow the disbursement of a fund of $1.9 billion over a period of four years.

The IMF’s Board of Directors was supposed to hold a meeting last month to discuss a loan programme for Tunisia, however, this was cancelled just days before it was scheduled to grant Tunisian authorities more time to finish the reform programme.

According to Abassi, Tunisia’s credit rating does not allow it to resort to the global markets to search for additional funds.

Tunisia is experiencing a deep financial crisis that in recent months led to frequent shortages of basic foodstuffs such as sugar, milk and rice, coinciding with an accelerating inflation rate that reached 9.8 per cent, according to official figures released in early December.

This has been coupled by a severe political crisis caused by President Kais Saied’s decision to monopolise power, dissolve parliament and hold a referendum on the constitution.

Saied says he took the measures to save the state from “total collapse.”

READ: IMF delayed loan file due to fears of major political upheavals