Press Release: IMF Executive Board Approves a 24-month US$1.74 Billion Stand-By Arrangement with Tunisia

IMF News, June 7, 2013

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Press Release: IMF Executive Board Approves a 24-month US$1.74 Billion Stand-By Arrangement with Tunisia

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Bibliographic details

• Published: June 7, 2013

Program approval and financing

• The Executive Board approved a 24-month Stand-By Arrangement equivalent to SDR 1.146 billion ( US$1.74 billion) to support Tunisia’s economic reform program during 2013-2015.
• An amount equivalent to SDR 98.8 million (about US$150.2 million) is available for immediate disbursement; the remaining amount will be phased in over the duration of the program, subject to eight program reviews.
• The Stand-By Arrangement entails regular access to IMF resources, amounting to 400 percent of Tunisia’s quota.

Objectives and expected outcomes

• Primary objectives: strengthen fiscal and external buffers, foster higher inclusive growth, and protect the most vulnerable.
• The program is expected to: reduce vulnerabilities from the international economic environment and political transition; lay foundations for a return of investor confidence; and improve the economy’s resilience to future shocks.

Policy measures and structural reforms

• Fiscal and external buffer measures:
  • Implement an appropriate fiscal policy that creates space for one-off costs (such as banking recapitalization) and investment spending while avoiding crowding out private-sector credit.
  • Pursue a prudent monetary policy aimed at containing inflation.
  • Maintain greater exchange rate flexibility to preserve reserves against exogenous shocks.
• Banking sector reforms:
  • Audit public banks.
  • Strengthen banking supervision.
  • Align prudential norms with international standards.
  • Improve data quality and develop a bank resolution mechanism.
• Fiscal and tax reforms:
  • Fiscal reforms to increase fiscal space through wage restraint and subsidy reform.
  • Comprehensive reform of tax policy and revenue administration to broaden the tax base and improve equity.
  • Medium-term fiscal consolidation to allow a better composition of expenditures, including sustained public investments.
• Structural reforms to boost growth and inclusion:
  • Accelerate reforms to promote private-sector development, lower regional disparities, and reduce pervasive state intervention.
  • Streamline fiscal incentives and regulatory barriers, including through a new investment code and corporate tax reform, and reduce red tape.
• Social protection:
  • Strengthen social assistance mechanisms and undertake a systematic assessment of the social impact of envisaged reforms.

Recent developments and key challenges

• Post-January 2011 revolution impacts:
  • Real GDP contracted by 2 percent in 2011.
  • Foreign direct investment (FDI) and tourism declined by more than 30 percent year-on-year.
  • Unemployment rose to record levels.
• Recovery and financing:
  • The economy began a moderate recovery in 2012.
  • The deteriorating current account deficit was partly financed by sustained donor financing, strengthened FDI and market access, helping increase reserves (but to a level still below 2010).
• Ongoing challenges:
  • Fragile banking sector, widespread social and economic disparities, and high youth unemployment.
  • Fiscal space has been reduced to meet pressing social and investment needs, although public debt remains at sustainable levels.
  • Addressing these challenges amid a political transition remains demanding.

Tunisia: Selected economic indicators and projections (2009–14)

• Population: 10.7 million (2012)
• Per capita GDP: US$4232 (2012)
• Quota: SDR 286.5 million
• Poverty rate: 12 percent (2010)
• Key export market: France, Italy
• Literacy rate: 78 percent (2011)
• Main exports: textiles, electronic and mechanical goods, energy, tourism

• Production and income (Percent Change, unless otherwise indicated)
  • Real GDP: 2009: 3.1; 2010: 2.8; 2011: -1.9; 2012: 3.6; 2013: 4.0; 2014: 4.5
  • GDP deflator: 2009: 3.3; 2010: 4.7; 2011: 5.1; 2012: 5.3; 2013: 5.6; 2014: 4.4
  • Gross national savings (percent of GDP): 2009: 22.1; 2010: 21.8; 2011: 16.5; 2012: 17.3; 2013: 19.0
  • Gross investment (percent of GDP): 2009: 24.9; 2010: 26.6; 2011: 24.1; 2012: 25.4; 2013: 24.7; 2014: 25.0

• Employment
  • Unemployment rate (end of period): 2009: 13.3; 2010: 13.0; 2011: 18.9; 2012: 16.7; 2013: ...

• Prices
  • Consumer price index (CPI), average: 2009: 3.5; 2010: 6.0
  • Consumer price index (CPI), end of period: 2009: 4.1; 2010: 4.2; 2011: 5.9; 2012: 5.0

• Central government finances (percent of GDP)
  • Revenue (excl. grants): 2009: 23.1; 2010: 23.3; 2011: 24.2; 2012: 23.8; 2013: 24.0
  • Expenditure and net lending: 2009: 25.8; 2010: 23.9; 2011: 27.7; 2012: 28.5; 2013: 31.1; 2014: 30.3
  • Fiscal balance (excl. grants): 2009: -2.7; 2010: -0.6; 2011: -3.5; 2012: -5.4; 2013: -7.3; 2014: -6.4
  • Structural fiscal balance 1/: 2009: -2.3; 2010: -1.1; 2011: -2.9; 2012: -4.7; 2013: -5.0; 2014: -3.8
  • Total government debt (foreign and domestic): 2009: 42.8; 2010: 40.4; 2011: 44.0; 2012: 45.3; 2013: 49.5

• Money and credit
  • Broad money (M3 of the financial system): 2009: 12.1; 2010: 9.1; 2011: 8.4; 2012: 12.6; 2013: 12.0
  • Credit to the economy: 2009: 10.3; 2010: 19.6; 2011: 13.4; 2012: 8.7; 2013: 10.8; 2014: 11.7
  • Money market rate (end of period) 2/: 2009: 4.10; 2010: 4.12; 2011: 3.53; 2012: 3.30; 2013: …

• External sector
  • Current account balance (percent of GDP, excl. grants): 2009: -2.8; 2010: -4.8; 2011: -8.1; 2012: -7.5; 2013: -6.0
  • Exports of goods, f.o.b. (in US$): 2009: -24.8; 2010: 14.0; 2011: 8.5; 2012: -5.2; 2013: 6.5
  • Imports of goods, f.o.b. (in US$): 2009: -21.9; 2010: 15.9; 2011: 7.7; 2012: 1.5; 2013: 3.7
  • FDI (percent of GDP): 2009: 3.0; 2010: 0.9; 2011: 3.9; 2012: 2.1; 2013: 2.5
  • Gross official reserves (US$ billions, end of period): 2009: 10.6; 2010: 9.5; 2011: 7.5; 2012: 8.6; 2013: 9.0
  • Gross reserves (months of imports) 3/: 2009: 5.2; 2010: 3.4; 2011: 3.8
  • External debt (percent of GDP): 2009: 49.4; 2010: 48.3; 2011: 47.8; 2012: 51.6; 2013: 51.1; 2014: 54.5
  • REER (index): 2009: -1.2; 2010: -0.5; 2011: -1.7; 2012: 0.0

• Memorandum items:
  • GDP at current prices (TD millions): 2009: 58,883; 2010: 63,397; 2011: 65,370; 2012: 71,332; 2013: 78,334; 2014: 85,465

• Notes from sources: Tunisian authorities and IMF staff estimates and projections.
• Footnotes included in original: 1/ Excludes banking recapitalization costs and one-off arrears payments for energy subsidies. 2/ Latest data for current year. 3/ End-of-year reserves over next year’s imports of goods and services.

IMF Communications Department press release, June 7, 2013.

Content in this bundle

• Pr13202apdf (PDF)

References

• Tunisia and the IMF
• Press Releases
• PRESS CENTER
• https://www.imf.org/en/home