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Press Release: Statement by IMF Deputy Managing Director Murilo Portugal at the Conclusion of his Visit to Tunisia
April 6, 2007
Mr. Murilo Portugal, Deputy Managing Director of the International Monetary Fund (IMF), made the following statement on April 6, 2007 in Tunis, at the conclusion of his visit to Tunisia:
"Today, I was privileged to meet and have fruitful discussions with the Tunisian authorities. I thank them for their hospitality.
"Tunisia's skillful macroeconomic management and commitment to reforms during the past decade resulted in improved economic growth and social conditions. Annual real GDP growth averaged about 5 percent during the past decade. As a result, Tunisia's GDP per capita is among the highest in the region. The IMF has supported these efforts with technical assistance and policy advice. Tunisia illustrates perfectly the importance of national ownership of policies for successful reforms.
"My meetings with the authorities focused on Tunisia's main economic challenges. The authorities' key objective over the medium term is to substantially reduce unemployment by significantly raising the already strong growth rate of the economy. The strategy presented in the 11th Plan to meet this objective is ambitious, yet achievable if the pace of reforms is accelerated along three main axes. First, Tunisia's economic position should be consolidated further. Second, the financial sector should be strengthened. Third, regional and global integration should continue.
"I congratulated the authorities for the emphasis they place on economic reforms to consolidate Tunisia's economic position and improve its resilience to external shocks. Further liberalization and improvement in the business climate are essential to promote domestic and foreign investment. We agreed that further reduction in the external debt would be needed and the authority's decision to allocate a large proportion of privatization receipts for early repayment of the external debt is an important step in that direction. It is also important to continue fiscal consolidation through increased efficiency in spending and broadening of the tax base. I commend the authorities for their pragmatic approach to liberalizing the capital account. As this process advances, increasing two-way flexibility of the exchange rate and more reliance on indirect monetary instruments should deepen money and foreign exchange markets, increase the efficiency of monetary policy, and set the stage for an inflation-targeting framework. In this regard, the Central Bank has already made significant progress and the new central bank law constitutes a significant step toward clarifying the monetary policy objective.
"I share with the authorities the view that strengthening the financial sector is a priority. In particular, efforts are underway to reduce the level of non performing loans. I am encouraged by the progress in the implementation of most of the recommendations of the Financial Sector Assessment Program conducted in collaboration with the IMF and the World Bank.
"Tunisia is actively promoting regional and global cooperation. The Association Agreement with the European Union provides for eliminating tariffs on manufactured goods by 2008. Tunisia also supports Maghreb integration, particularly through the recent initiatives endorsed by the IMF. Several bilateral free trade agreements have also recently been signed. The momentum towards deeper economic integration should continue. While Most Favored Nation (MFN) tariffs have been significantly reduced, they remain relatively high.
"Finally, I would like to commend Tunisia's support for transparency in policy making. The authorities have systematically published all IMF documents on Tunisia, one of the few countries in the region subscribing to the IMF Special Data Dissemination Standard. This reflects international best practice in the area of economic and financial statistics," Mr. Portugal said.
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