International Monetary Fund

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Program note


Last Updated: April 3, 2015

Current IMF-Supported Program:

A 24-month Stand-By Arrangement (SBA) in the amount of SDR 1.146 billion (US$1.74 billion, amounting to 400 percent of Tunisia’s quota), approved by the Executive Board of the IMF on June 7, 2013. To-date, US$ 1.1 billion has been disbursed.


Following the January 2011 revolution and the ensuing sharp decline in economic activity, the Tunisian economy embarked on a moderate recovery in a context marked by a difficult political transition and an uncertain international economic environment. Fiscal space has been reduced through higher wages and subsidies and pressing investments, although public debt remains at sustainable levels. The deteriorating current account deficit—caused partly by falling demand from Europe and increased energy imports—has been financed by sustained donor financing, FDI, and market access, which helped maintain reserves above critical threshold levels.

Widespread social and economic disparities, high unemployment, and a fragile banking sector are key challenges that need to be addressed. The successful end of the political transition and the installation of a post-transition government with broad support in parliament provide an opportunity to push ahead for private sector reforms that are needed to address these challenges.

Role of the IMF

The Tunisian authorities have designed a comprehensive program to achieve short-term macroeconomic stabilization and address these challenges by fostering stronger and more inclusive growth and protecting the most vulnerable. Key elements of this home-grown stabilization and reform program are to: (i) build up fiscal and external buffers with appropriate fiscal, monetary, and exchange rate policies; (ii) help to support growth by addressing critical vulnerabilities in the banking sector and by improving the investment climate through reforms of the tax and investment regimes; and (iii) strengthen social safety nets to protect the vulnerable.

Under the program, macroeconomic stability has been maintained under a challenging political environment that has seen the elaboration of a new Constitution, several changes in government, and new successful elections. The authorities have also taken steps to reform the economy, including through strengthening the monetary policy framework and initiating tax and banking sector reforms, which would help private sector growth. They have also reduced regressive energy subsidies so as to create more room to increase much needed social and investment spending. This was done in line with increased social transfers to vulnerable households and the introduction of a social electricity tariff that protects poorer households that consume less than 100 kwh.

The IMF is also supporting Tunisia by providing technical assistance in building capacity for tax policy and revenue administration and better public financial management, strengthening the central bank’s supervision capacity and collateral framework, and improving the production of monetary statistics.

The Challenges Ahead

The key challenges facing the authorities are to:

  • Address the vulnerabilities of the banking sector by recapitalizing public banks in line with good international practices (e.g., no private sector bailout), setting up an asset management company, a proper bank resolution framework, and a sound regulatory and supervisory framework.
  • Achieve a better composition of public expenditures by increasing growth-supporting investments and social spending, which includes spending for social safety nets, through controlling the wage bill and reducing ill-targeted subsidies. The recent decline in oil prices provide an opportunity to complete subsidy reforms.
  • Foster higher and more inclusive growth to create high-value-added jobs and reduce regional inequalities, by implementing a comprehensive structural reform agenda to promote private-sector development (including a corporate tax reform, new bankruptcy law, and a new investment code).