Negotiations between Tunisia and the International Monetary Fund (IMF) to obtain a loan of around two billion dollars seem to be bogged down in a new deadlock, against the backdrop of deep differences over the program of economic and social reforms demanded by the donor of international funds.
Since the deprogramming of Tunisia’s file from the agenda of the IMF’s Board of Directors in January 2023, discussions between the two parties have stalled, raising many concerns about Tunisia’s financial stability, which counted on this loan to straighten out its asphyxiated finances.
If the international financial institution makes its support conditional on the lifting of the hydrocarbon subsidy and the reform of public enterprises, Tunisia remains divided on the implementation of these reforms, faced with the reluctance of the trade union centers and the warnings of the opposition.
The Tunisian party fears, in particular, an attack on its sovereignty and a deterioration of the already precarious social conditions of a large section of Tunisians, in the event of a forced passage to the lifting of subsidies for hydrocarbons and certain basic products, which risks accentuating inflation which is currently close to 10%.
“The diktats coming from abroad and which only lead to more impoverishment are unacceptable”, it is with these words that Tunisian President Kaïs Saïed expressed his rejection of the conditions imposed on Tunisia to access financing so crucial to keeping the country afloat.
The same goes for the influential central trade union, the Tunisian General Labor Union (UGTT), which has stepped up to warn against any reform likely to undermine the purchasing power of Tunisians.
In a speech delivered on the occasion of Labor Day, May 1, the secretary general of the UGTT, Noureddine Taboubi, warned of the possible repercussions of the measures imposed by the IMF, such as the lifting of compensation, the reduction of the wage bill and the privatization of public enterprises which will aggravate the impoverishment of the Tunisian people and increase the rate of inflation”.
He also questioned the effectiveness of negotiations with the IMF for a year and a half, denouncing the lack of transparency.
“The government must inform the Tunisian people about the content of the reform program presented to the IMF and about the progress of the negotiations,” he insisted.
For its part, the IMF maintains that the reform program proposed by Tunisia and subject to ongoing negotiations with the IMF for more than 12 months, takes into account the challenges and offers prospects for the future which require the promotion of investment. especially in the private sector.
“Each reform has repercussions that should be alleviated while focusing on the positive outlook and this is what we are doing in coordination with the Tunisian authorities,” said Jihad Azour, director of the Middle Department. IMF East and Central Asia, at a press conference held on the sidelines of the World Bank Group and IMF Spring Meetings.
Azour stressed that the IMF will continue to support Tunisia, pointing out that other international institutions have also promised to support it in order to solve inflation problems and guarantee economic stability.
It is clear that the blocking of negotiations has completely turned the cards of the Tunisian government upside down, especially since the 2023 Finance Law is based on initial assumptions according to which, financing of approximately 8 billion dollars, of which 5, 28 billion must be contracted abroad are essential to preserving budgetary balances.
This situation raises serious concerns among fine connoisseurs of the Tunisian economy who fear a further drop in economic indicators and a deterioration in socioeconomic conditions, given the lack of real alternatives to foreign financial assistance.
“There is no other alternative to the IMF loan, in the current circumstances as some claim,” insisted economist Aram Belhadj, explaining that the alternative can only exist in the medium term and the government is well aware of this, especially since the country’s needs in terms of budgetary financing amount to more than 25 billion dinars.
For the economist, this gap is difficult to cover with the country’s traditional resources, from tourism, transfers from Tunisians residing abroad and olive oil exports.
Same story with economist Ridha Chkoundali, who believes that the situation will be unclear, in the absence of an agreement with the IMF, with negative repercussions on the country’s sovereign bonds.
According to other analyses, Tunisian bonds fell dramatically, in the wake of these new twists, which were not well received by the financial markets, which immediately sanctioned the country’s sovereign bonds.
On the international scene, fears about the future of the Tunisian economy are growing. Political leaders from all over the world and experts from international organizations have constantly sounded the alarm, not ruling out that irreparable could happen this time if the country does not manage to access foreign funding to replenish its coffers.
The majority of European leaders and international and regional financial institutions condition their support for Tunisia on the signing of the agreement with the IMF relating to a loan of 1.9 billion dollars. No other way out is possible or conceivable at this time.
Tunisia has managed to conclude a preliminary agreement with the IMF since October 15, 2022, with a view to obtaining a loan of 1.9 billion dollars, repayable over a period of 48 months. The deprogramming of Tunisia’s file from the agenda of its board of directors meeting in January 2023, reignited speculation and controversy on the prospects of this agreement supposed to breathe a breath of fresh air into the country’s economy.
To give its approval, the IMF expects a firm commitment from the Tunisian authorities to implement a program of reforms to restructure Tunisian public enterprises burdened by heavy indebtedness and to lift subsidies on certain basic products.
According to several observers, the negotiations could take a new turn, especially since the assumptions and balances on which the technical agreement signed with the IMF in October 2022 was based have changed, raising the specter of new conditions. more painful, or even a passage through the Paris Club, whose role is to find coordinated and lasting solutions to the payment difficulties of indebted countries.
