In September, the Tunisian government signed an agreement with its general labor union (UGTT) to end the social crisis prevailing in the country.  The agreement paved the way for the conclusion of an IMF reform program. 

Tunisia has secured a staff-level agreement for a new US$1.9 billion economic program, the IMF announced last Saturday. 

The agreement, which covers an expanded credit facility, aims to restore Tunisia's external and fiscal stability, and strengthen social protection while promoting strongly sustainable, and more inclusive growth and private sector-led job creation. The goals will be achieved by targeting the tax sector, integrating the informal sector into the tax system, and broadening the tax base.

Amid an economic crisis coupled with inflation, which is affecting purchasing power, the Tunisian government has also committed to controlling spending, freeing up budgetary space for social assistance, and strengthening the “social safety net by increasing cash transfers and expanding the coverage of social safety nets to compensate vulnerable households for the impact of higher prices.”

The new agreement comes after lengthy discussions between Tunis and the Bretton Woods institution. The latter had required several guarantees from the Tunisian state before continuing negotiations. One of them was an agreement with the Tunisian General Labor Union (UGTT), which was on strike to demand more social support. 

In September, the government agreed to raise wages. Nevertheless, under the staff-level agreement, it will still have to pursue its payroll consolidation program, “embark on a comprehensive agenda to reform state-owned enterprises, starting with the enactment of a new SOE law” and accelerate structural reforms to boost competition and create a transparent and fair environment for investors.

 For the IMF, the country will also have to “adapt and build resilience to climate change by promoting investments in renewable energy as well as land and (waste) water management, and measures to preserve Tunisia’s coastlines, agriculture, health, and tourism.”

“The international community has an important role to play in facilitating the authorities’ program through the rapid release of financing to ensure the success of the authorities’ policy and reform efforts,” the institution indicates. 

Last September, Marouan Abassi, Governor of the Tunisian Central Bank indicated that his country was expecting up to US$4 billion in IMF financing. The new agreement will be submitted to the Fund's Executive Board for approval, by December 2022.

Moutiou Adjibi Nourou