An International Monetary Fund (IMF) mission led by Mr. Björn Rother
visited Tunis from April 7 – 18, 2017, to conduct
the first review of Tunisia’s economic program supported by the four-year
IMF Extended Fund Facility (EFF) approved in May 2016
(see Press Release No. 16/238).
At the conclusion of the mission, Mr. Rother issued the following
statement:
“Following productive talks, the IMF staff team and the Tunisian
authorities reached a staff-level agreement on the policies needed to
complete the first review of Tunisia’s EFF. The staff level agreement is
subject to approval by the IMF’s Executive Board. Completion of the review
would make available SDR 227.3 million (about US$308 million), bringing
total disbursements under the EFF to about US$627.5 million.
“Tunisia’s economy faces significant challenges. Fiscal and external
deficits reached record levels, the wage bill as a percent of GDP has
climbed to one of the highest in the world, and public debt further
increased to 63 percent of GDP at the end of 2016. Core inflation edged up.
Growth in 2017 is expected to double to 2.3 percent, but will remain too
low to significantly reduce unemployment, especially in the interior
regions and among the youth.
“The difficult economic situation requires strong and urgent action to
maintain macroeconomic stability and boost job creation. The IMF team
welcomes the determination of the national unity government to act swiftly,
guided by priorities of the “Accord de Carthage” and the 5-year Development
Plan. The policies supported by the EFF are helping to translate the
authorities’ agenda into specific actions.
“Creating more economic opportunity for all Tunisians and protecting the
health of public finance are at the heart of the government’s economic
strategy. In the near term, the priorities center on increasing tax revenue
in an equitable way, implementing the civil service reform strategy that
puts the wage bill on a sustainable trajectory, reducing energy subsidies,
and covering the immediate liquidity deficits in the social security
system. Increasing social spending and improving the targeting of the
social safety net will protect the most vulnerable and their purchasing
power in these difficult times. A tighter monetary policy would counteract
inflationary pressures, and greater exchange rate flexibility would help
narrow the large trade deficit.
“The government has made encouraging progress in advancing delayed reforms
to tackle the structural barriers weighing on the Tunisian economy.
Critical elements of this agenda include new legislation for investment and
competition, work towards the establishment of a new constitutional body
for the fight against corruption, and measures to reform public banks and
public enterprises. Comprehensive pension reform will make the retirement
system viable for future generations.
“Tunisia’s participation in the G20 initiative Compact with Africa will be an opportunity to build on the success
of last November’s investor conference Tunisia 2020 and re-affirm
the government’s determination to build a better economic future for
Tunisia. Rigorously implementing the comprehensive reform package supported
under the EFF will ultimately unlock the significant long-term potential of
the Tunisian economy and improve living conditions of all Tunisians.
“Staff met with the Head of Government Youssef Chahed, Minister of Finance
Lamia Zribi, Minister of Investment Fadhel Abdelkefi, Minister of Energy
Hela Cheikhrouhou, and Central Bank Governor Chedly Ayari. It also had
discussions with representatives of Union Générale Tunisienne du Travail
(UGTT), Union Tunisienne de l’Industrie, du Commerce et de l’Artisanat
(UTICA), and civil society; and coordinated closely with the World Bank and
other external partners of Tunisia. The mission would like to thank the
authorities and all those with whom they met for their warm welcome and the
frank and productive discussions.”
