{
  "title": "IMF Executive Board Completes Second Review under the Extended Fund Facility (EFF) Arrangement for Tunisia",
  "publication": "IMF News, March 26, 2018",
  "sourceUrl": "https://www.imf.org/en/news/articles/2018/03/26/pr18104-imf-executive-board-completes-second-review-under-eff-arrangement-for-tunisia",
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  "summary": "On March 23, 2018, the Executive Board completed the second review of Tunisia’s economic reform program under the Extended Fund Facility (EFF).",
  "publishDate": "2018-03-26",
  "sections": [
    {
      "heading": "Review outcome and disbursements",
      "content": "- On March 23, 2018, the Executive Board completed the second review of Tunisia’s economic reform program under the Extended Fund Facility (EFF).\n- Completion of the review allows the authorities to draw an amount equivalent to SDR 176.7824 million (about US$257.3 million).\n- Total disbursements under the arrangement after this review amount to the equivalent of SDR 631.3661 million (about US$919 million).\n- The Board approved the authorities’ request to move from semi-annual to quarterly reviews; overall disbursements available throughout the program remain unchanged."
    },
    {
      "heading": "Board approvals, waivers, and exchange restrictions",
      "content": "- The Board approved waivers of non-observance of end of December performance criteria on:\n  - net international reserves,\n  - net domestic assets,\n  - the primary fiscal deficit,\n  - current primary spending.\n- The Board approved waiver of non-observance of the continuous performance criterion on imposing or intensifying restrictions on the making of payments and transfers for current international transactions.\n- The Board granted approval for retention of an exchange restriction barring trade credit for certain non-essential imports until December 31, 2018."
    },
    {
      "heading": "Program framework and objectives",
      "content": "- The four-year EFF arrangement amount: SDR 2.045625 billion (about US$2.98 billion, 375 percent of Tunisia’s quota); approved May 20, 2016.\n- The program aims at:\n  - reducing macroeconomic vulnerabilities,\n  - ensuring adequate social protection,\n  - fostering private sector-led, job-creating growth.\n- Priorities include:\n  - growth-friendly and socially-conscious fiscal consolidation to stabilize public debt below 73 percent of GDP by 2020 while raising investment and social spending,\n  - reversing the recent trend of accelerating inflation,\n  - continued exchange rate flexibility to support exports and strengthen international reserve coverage.\n- Structural reform focus areas: improving governance, the business climate, fiscal institutions, and the financial sector."
    },
    {
      "heading": "IMF assessment of Tunisia’s macroeconomic situation",
      "content": "- Tunisia experienced a modest recovery in 2017 but continues to face:\n  - elevated macroeconomic vulnerabilities,\n  - high unemployment.\n- Specific challenges noted:\n  - Debt has continued to increase.\n  - Inflation has accelerated.\n  - International reserve cover is now less than three months of imports.\n- The IMF stated that decisive implementation of the Fund-supported program is necessary to sustain macroeconomic stability."
    },
    {
      "heading": "Policy recommendations and near-term priorities",
      "content": "- Fiscal policy:\n  - Implement a deficit-reducing budget for 2018.\n  - Increase tax revenue in an equitable manner.\n  - Reign in current spending to reduce debt and increase investment and social expenditure.\n  - Strengthen tax collection.\n  - Implement voluntary separations for civil servants.\n  - Do not grant new wage increases unless growth surprises on the upside.\n  - Enact quarterly fuel price hikes.\n  - Distribute the adjustment burden equitably across society and protect the vulnerable.\n  - Public-private partnerships should only proceed with adequate legal and regulatory frameworks.\n- Monetary and exchange rate policy:\n  - Continue monetary tightening; the Central Bank has widened the interest corridor and enacted a strong policy rate increase.\n  - Further policy rate hikes will be needed to move real interest rates into positive territory unless inflation quickly subsides.\n  - Maintain exchange rate flexibility to correct remaining overvaluation of the real exchange rate, improve the current account deficit, and rebuild reserves.\n  - Adhere to the FX intervention budget and conduct more competitive FX auctions.\n- Social and structural policies:\n  - Increase near-term financing for social security and follow with equitable and sustainable pension reforms.\n  - Finalize the database of vulnerable households for targeted social assistance to help preserve the social contract.\n  - Ensure public bank restructuring is facilitated by legislation to reduce NPL portfolios.\n  - Continue enhancements to the AML/CFT regime to address deficiencies."
    },
    {
      "heading": "Structural reforms progress",
      "content": "- Achievements cited:\n  - Establishment of the High Anti-Corruption Authority.\n  - Building institutions in support of the investment code, including the one-stop shop.\n  - Legislation to facilitate reduction of NPL portfolios to aid public bank restructuring.\n  - Ongoing enhancements to the AML/CFT regime."
    },
    {
      "heading": "Key statistics and dates",
      "content": "- SDR 176.7824 million (about US$257.3 million) — amount available to draw after second review.\n- Total disbursements: SDR 631.3661 million (about US$919 million).\n- EFF arrangement total: SDR 2.045625 billion (about US$2.98 billion, 375 percent of Tunisia’s quota).\n- Review completion date: March 23, 2018.\n- EFF approval date: May 20, 2016.\n- Exchange restriction barring trade credit for certain non-essential imports approved until December 31, 2018.\n- Public debt stabilization target: below 73 percent of GDP by 2020.\n- International reserve cover: now less than three months of imports.\n\nSource: IMF Executive Board Completes Second Review under the Extended Fund Facility (EFF) Arrangement for Tunisia, Press Release No. 18/104.\n\n---\n\n\n References\n\n- Mitsuhiro Furusawa\n- Tunisia and the IMF\n- Special Drawing Rights (SDRs) -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- (see Press Release No. 16/238).\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2018/03/26/pr18104-imf-executive-board-completes-second-review-under-eff-arrangement-for-tunisia"
    }
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    "Published: March 26, 2018",
    "On March 23, 2018, the Executive Board completed the second review of Tunisia’s economic reform program under the Extended Fund Facility (EFF).",
    "Completion of the review allows the authorities to draw an amount equivalent to SDR 176.7824 million (about US$257.3 million).",
    "Total disbursements under the arrangement after this review amount to the equivalent of SDR 631.3661 million (about US$919 million).",
    "The Board approved the authorities’ request to move from semi-annual to quarterly reviews; overall disbursements available throughout the program remain unchanged.",
    "The Board approved waivers of non-observance of end of December performance criteria on:",
    "The Board approved waiver of non-observance of the continuous performance criterion on imposing or intensifying restrictions on the making of payments and transfers for current international transactions.",
    "The Board granted approval for retention of an exchange restriction barring trade credit for certain non-essential imports until December 31, 2018.",
    "The four-year EFF arrangement amount: SDR 2.045625 billion (about US$2.98 billion, 375 percent of Tunisia’s quota); approved May 20, 2016.",
    "The program aims at:",
    "Priorities include:",
    "Structural reform focus areas: improving governance, the business climate, fiscal institutions, and the financial sector.",
    "Tunisia experienced a modest recovery in 2017 but continues to face:",
    "Specific challenges noted:",
    "The IMF stated that decisive implementation of the Fund-supported program is necessary to sustain macroeconomic stability.",
    "Fiscal policy:",
    "Monetary and exchange rate policy:",
    "Social and structural policies:",
    "Achievements cited:",
    "SDR 176.7824 million (about US$257.3 million) — amount available to draw after second review.",
    "Total disbursements: SDR 631.3661 million (about US$919 million).",
    "EFF arrangement total: SDR 2.045625 billion (about US$2.98 billion, 375 percent of Tunisia’s quota).",
    "Review completion date: March 23, 2018.",
    "EFF approval date: May 20, 2016.",
    "Exchange restriction barring trade credit for certain non-essential imports approved until December 31, 2018.",
    "Public debt stabilization target: below 73 percent of GDP by 2020.",
    "International reserve cover: now less than three months of imports.",
    "[Mitsuhiro Furusawa](http://www.imf.org/external/np/omd/bios/mf.htm)",
    "[Tunisia and the IMF](http://www.imf.org/external/country/TUN/index.htm)",
    "[Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[(see Press Release No. 16/238).](https://www.imf.org/en/News/Articles/2015/09/14/01/49/pr16238)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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