Tunisia and the International Monetary fund reached a preliminary agreement on the terms of the fourth review in the framework of the Extended Fund Facility.

According to a release published by the Bretton Woods institution, “the Tunisian authorities emphasized their intention to continue to act decisively to contain the budget deficit”. With this stated intention, IMF’s administrative board will consider the Fourth review by end-September.

Once the review is approved, the country will be granted SDR177 million (about $257 million). This new funding included, the total amount provided to Tunisia in the framework of the Extended Fund Facility would be $1.5 billion.

According to the IMF team, led by Björn Rother, on their visit to Tunisia on August 15-31, 2018, there are some encouraging signs indicating that the country’s economic revival is on the right path. For instance, on a year-to-year basis, Tunisia’s economy grew by 2.6% during H1, 2018 and the agriculture, tourism, and services sectors performed very well.

However, IMF estimates that despite the growth, the country still depends on imports and consumption. Investments were low. In addition, youth and women unemployment remained high, the institution reveals.

Inflation dropped slightly but at 7.5% it is still significantly higher compared to its level in the past years. Money and credit increased and the currency (dinar) depreciated further. This will probably raise the inflation in the months to come.

The external environment is also confronted by new challenges related notably to oil prices which was sensibly higher than expected early this year and the financial market is more volatile.

IMF explains that additional economic reforms (aimed at boosting governance notably) and the fight against corruption are necessary to overcome investors’ reluctance and restore their confidence.

It also asks the authorities to continue their budget deficit reduction policy this year and the next since those policies are essential to stabilize the debt and reduce the excessive imports in view of the increase in oil prices.  

Let’s remind that the current 48 months extended fund facility with Tunisia was approved by IMF on May 20, 2016. In the framework of the fund facility, Tunisia will be granted SDT2.9 billion (about $2.9 billion averaging 375% of the country’s quota account) to support its economic and Financial reform.