Yesterday, Tunisia’s government announced it has cut fuel subsidy, causing prices of petrol to raise by 6.7%, Reuters reported. This decision which falls in line with one of the reforms imposed to the country by the International monetary fund (IMF), aims at helping reduce its budget deficit.

Indeed, it may be recalled that last month, IMF released to Tunisia a tranche of $320 million under a loan programme valued at $2.9 billion. The Bretton Woods institution did so only after the government agreed to speed up implementation of its economic reforms. These include lay-offs of civil workers.

According to Tunisian authorities, if nothing was done, the budget deficit would have risen to 5.9% this year, against 5.4% in 2016. This would have resulted mainly from higher fuel costs and weakening of local currency, dinar. Now, Tunisians will purchase lead-free petrol at 1.75 dinar a litre, as compared to 1.65 dinar previously, the first increase of this price in three years.

Aaron Akinocho