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The governor of the Central Bank of Tunisia hopes an agreement with the IMF "in the coming weeks" (photo: F.Dubessy)
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TUNISIA. In an interview with Reuters news agency on Sunday 18 September 2022, Marouane Abassi said that the long-awaited agreement with the International Monetary Fund (IMF) is close. According to the governor of the Central Bank of Tunisia, "The amount is still being negotiated. He believes that it will be "between $ 2 and 4 billion", and said, "we hope to reach an agreement at the staff level of the IMF in the coming weeks.
The signature should therefore occur no later than during the month of October 2022.
The Bretton Woods institution has made many requirements before granting a line of credit to Tunisia. The acceptance by referendum on July 25, 2022 of a new constitution, the announcement of a timetable for the next polls intended to get out of the full powers exercised by Kaïs Saïed since July 25, 2021. And very recently, the publication in the Official Gazette of the presidential decree on the organization of parliamentary elections, scheduled for December 17, 2022 have advanced the discussions.
The agreement initialled in August 2022 between the government and the Union Générale des Travailleurs Tunisiens (UGTT) on a 5% increase in public sector salaries has also tipped the balance strongly in favour of an agreement. Fitch Ratings highlighted this on Friday 16 September 2022, indicating that it increases the probability of an agreement with the IMF. This text removes the risk of demonstrations called by this powerful organization, which claims a million members and is capable of blocking the country and its economy with well-followed strikes. As it proved in June 2022. Moreover, it offers a clear vision of the weight of salaries in the GDP over several years. The civil service accounts for 46% of the state budget. The agreement therefore reassures the IMF, which demands an agreement between the government and the powerful UGTT.
Other requested reforms, for more austerity, have not yet been implemented.
The signature should therefore occur no later than during the month of October 2022.
The Bretton Woods institution has made many requirements before granting a line of credit to Tunisia. The acceptance by referendum on July 25, 2022 of a new constitution, the announcement of a timetable for the next polls intended to get out of the full powers exercised by Kaïs Saïed since July 25, 2021. And very recently, the publication in the Official Gazette of the presidential decree on the organization of parliamentary elections, scheduled for December 17, 2022 have advanced the discussions.
The agreement initialled in August 2022 between the government and the Union Générale des Travailleurs Tunisiens (UGTT) on a 5% increase in public sector salaries has also tipped the balance strongly in favour of an agreement. Fitch Ratings highlighted this on Friday 16 September 2022, indicating that it increases the probability of an agreement with the IMF. This text removes the risk of demonstrations called by this powerful organization, which claims a million members and is capable of blocking the country and its economy with well-followed strikes. As it proved in June 2022. Moreover, it offers a clear vision of the weight of salaries in the GDP over several years. The civil service accounts for 46% of the state budget. The agreement therefore reassures the IMF, which demands an agreement between the government and the powerful UGTT.
Other requested reforms, for more austerity, have not yet been implemented.
A lever for other financing
A signature with the IMF would act as a lever to activate other sources of financing. Marouane Abassi mentions bilateral financing with Japan and the Gulf countries. "We have advanced discussions with Saudi Arabia," said the governor of the Central Bank of Tunisia.
The country is going through a serious economic crisis with inflation at nearly 9% and its public finances are in dire straits. Its budget deficit is expected to reach 9.7% of the Gross Domestic Product (GDP) against 6.7% according to previous forecasts. The rise of the dollar and a sharp increase in the price of grain and energy following the war in Ukraine explain this readjustment;
Due to the inability to pay for certain imports, there are shortages of many food products. Saturday, September 17, 2022, as part of its plan to reduce energy subsidies recommended by the international donors of Tunisia, the Tunisian Ministry of Energy decided to increase the price of gas bottles used for cooking by 14% (7.750 dinars to 8, 800 dinars - 2.42 to 2.75 €). The first increase in twelve years. The government has also raised fuel prices by 3%. Gasoline is thus increased from 2.330 dinars to 2.400 dinars (from 0.73 to 0.75 €) per liter. This is the fourth increase for the year 2022. The energy balance deficit doubled to 6 billion dinars (€1.87bn) in the first eight months of 2022, compared to 2.9 billion dinars (€0.91bn) in 2021.
The country is going through a serious economic crisis with inflation at nearly 9% and its public finances are in dire straits. Its budget deficit is expected to reach 9.7% of the Gross Domestic Product (GDP) against 6.7% according to previous forecasts. The rise of the dollar and a sharp increase in the price of grain and energy following the war in Ukraine explain this readjustment;
Due to the inability to pay for certain imports, there are shortages of many food products. Saturday, September 17, 2022, as part of its plan to reduce energy subsidies recommended by the international donors of Tunisia, the Tunisian Ministry of Energy decided to increase the price of gas bottles used for cooking by 14% (7.750 dinars to 8, 800 dinars - 2.42 to 2.75 €). The first increase in twelve years. The government has also raised fuel prices by 3%. Gasoline is thus increased from 2.330 dinars to 2.400 dinars (from 0.73 to 0.75 €) per liter. This is the fourth increase for the year 2022. The energy balance deficit doubled to 6 billion dinars (€1.87bn) in the first eight months of 2022, compared to 2.9 billion dinars (€0.91bn) in 2021.
