## IMF Survey : Tunisia Gets $2.9 billion IMF Loan to Strengthen Job Creation and Economic Growth

_IMF News, June 2, 2016_

## Source details

**Canonical URL:** [IMF Survey : Tunisia Gets $2.9 billion IMF Loan to Strengthen Job Creation and Economic Growth](https://www.imf.org/en/news/articles/2015/09/28/04/53/sonew060216a)

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## Bibliographic details
- Published: June 2, 2016

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### Program overview and objectives
- IMF approved a four-year, $2.9 billion loan for Tunisia to support the authorities’ economic agenda aimed at promoting more inclusive growth and job creation, while protecting the most vulnerable households.
- The Extended Fund Facility follows a prior Stand-By Arrangement that helped preserve macroeconomic stability during political transition, social tensions, and security shocks that hit tourism.
- Main program focus:
  - Consolidate progress on macroeconomic stability.
  - Address long-standing structural weaknesses that resulted in slow growth and high external balances.
  - Support the authorities’ five-year economic vision centered on private sector development.

### Program priorities and structural reforms
- Key policy priorities under the IMF program:
  - A gradual reduction of the overall fiscal deficit to stabilize public debt at about 50 percent of GDP.
  - Better composition of public spending; wage containment would allow for a doubling of priority public investment that supports growth and poverty reduction.
  - Greater exchange rate flexibility to improve Tunisia’s external competitiveness and rebuild foreign reserves.
  - Improving financial sector intermediation, including through continued restructuring of public banks.
  - Structural reforms: reforms to public institutions and state-owned companies, reducing energy subsidies, a more progressive and equity-friendly tax system, strengthening governance, and improving the business climate.
- IMF projection: All these reforms will take time to bear fruit, but over time they will help increase growth to 5 percent.

### Employment and private sector development
- Tunisia’s labor market metrics highlighted by the program:
  - Overall unemployment rate: 15 percent.
  - Youth unemployment rate: 35 percent.
- IMF recommendations to create more jobs:
  - Pursue macroeconomic policies and structural reforms to restore investor confidence weakened by political uncertainties and security challenges.
  - Move quickly with the new investment code and implement the new competition law to reduce pervasive state intervention, excessive regulation, and limited competition.
  - Use private-public partnerships to attract private capital for infrastructure projects.
  - Streamline existing regulations to signal openness to local and global investors.
  - Reform the labor market over time while deploying active labor market programs (e.g., public works, microfinance) and vocational training programs to lessen unemployment among college graduates.

### Civil service reform and fiscal space
- Civil service reform is the top stakeholder priority and central to the authorities’ economic vision.
- Current wage bill and fiscal footprint:
  - Wage bill represents 65 percent of tax revenue, 14 percent of GDP, and 45 percent of total spending.
- Reform goals and measures:
  - Increase public sector efficiencies and quality of services by revising status for high-level civil servants, revising the pay structure, better linking pay with performance, and redeployments to underserved interior regions.
  - Contain the wage bill by reducing it to 12 percent of GDP by 2020, thereby creating fiscal space to double public investment.
  - Civil service reform should be coordinated with tax reform (widening the base and increasing purchasing power for the lowest income taxpayer, e.g., by raising the income tax threshold).
- Emphasis: Private sector—not the public sector—can create sustainable jobs; broad-based consensus is required for successful civil service reform.

### Governance, anti-corruption, and institutional measures
- Strengthening governance is a government priority and is enshrined in the Tunisian constitution.
- Planned and ongoing measures:
  - Drafting a law to set an independent high-level constitutional body to fight corruption.
  - New legislation by the end of the year to protect whistleblowers, address conflicts of interest in the public sector, and require financial disclosure of net worth by senior government officials.
  - Improvements in public financial management and increased publication of government documents to promote transparency.
  - A new ministry of civil service affairs and good governance established three months ago to help implement reforms.
  - IMF program support to strengthen anti-money laundering and combating the financing of terrorism framework.

### Stakeholder engagement and consultation
- IMF engagement strategy:
  - Regular consultations with non-governmental organizations focused on social issues, think tanks, trade and business unions.
  - Periodic in-country visits and regular dialogue via the IMF resident representative in Tunis.
  - These discussions aim to listen to stakeholders, improve understanding of country issues, and enhance policy discussions with the authorities.

*IMF Survey — Tunisia Gets $2.9 billion IMF Loan to Strengthen Job Creation and Economic Growth (June 2, 2016).*

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## Content in this bundle

- [Cr16138pdf (PDF)](/-/media/websites/imf/imported/external/pubs/ft/scr/2016/_cr16138pdf.pdf){rel="external" type="application/pdf"}

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Country Focus](https://www.imf.org/en/news/country-focus)
- [Press release](http://www.imf.org/external/np/sec/pr/2016/pr16238.htm)
- [Tunisia and the IMF](http://www.imf.org/external/country/TUN/index.htm)
- [Regional economic outlook update](http://www.imf.org/external/pubs/ft/reo/2016/mcd/mreo0416.htm)
- [Tunisia’s Resident Representative](http://www.imf.org/external/country/TUN/rr/index.htm)
- [first program](http://www.imf.org/external/pubs/ft/survey/so/2013/car061713a.htm)
- [Stand-By Arrangement](https://www.imf.org/external/np/exr/facts/sba.htm)
- [Extended Fund Facility](https://www.imf.org/external/np/exr/facts/eff.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/sonew060216a_