IMF Staff Concludes Visit to Tunisia

IMF News, July 17, 2019

Source details

Press Release No. 19/286
July 17, 2019
An IMF staff team led by Björn Rother visited Tunis from July 11–17, 2019.
End-of-Mission note: "This mission will not result in a Board discussion."
IMF Communications Department — MEDIA RELATIONS. PRESS OFFICER: Wafa Amr. Phone: +1 202 623-7100 Email: MEDIA@IMF.org

Tight monetary and fiscal policies during the first half of 2019 have reduced inflation and laid the foundation for a second year of budget deficit reduction.
Inflation: 6.8 percent in June from a peak of 7.7 percent a year earlier.
Lower refinancing as of end-June contributed to disinflationary outcomes.
Public debt reached 77 percent of GDP at the end of 2018.

Growth forecast: "Growth will likely be limited to at most 2 percent" for 2019.
Downside factors highlighted:
- Disappointing performance of industry in recent months.
- Recent appreciation of the dinar.
- Increase in oil prices.
- Slower growth in Tunisia’s main trading partners.
Offsetting factor: "More favorable than expected performance of the tourism sector."
These risks are "likely to weigh on the fiscal and external current accounts."

Near-term policy focus:
- Continue reducing fiscal and external deficits.
- Lower inflation further.
- Strengthen the social safety net for low-income households.
Fiscal consolidation specifics:
- Meeting the budget deficit target of 3.9 percent of GDP for 2019 is described as "critical to slow down the accumulation of public debt."
- Required actions include continued strong performance on tax and tax arrears collection and additional measures to contain current expenditures.
- Suggested containment measures: continued moderation of the wage bill and energy subsidies, noting the constraint of higher international oil prices.
Social protection:
- Staff supports the authorities’ ongoing efforts to strengthen social safety nets especially for low-income households.
Monetary and exchange rate policy:
- "Monetary policy should remain geared towards reducing inflation that erodes the purchasing power of Tunisians."
- "Exchange rate flexibility can support an improvement in the current account and international reserves."

The IMF team met with:
- Minister of Finance Ridha Chalghoum
- Minister of Development, Investment and International Cooperation Zied Laâdhari
- Minister of Major Reforms Taoufik Rajhi
- Central Bank Governor Marouane El Abassi
- Representatives of the labor and employers’ unions, the private sector, civil society, and the diplomatic community.
The mission "would like to thank the authorities and all those with whom it met for their warm welcome and constructive discussions."

IMF Staff Concludes Visit to Tunisia — Press Release No. 19/286, July 17, 2019