AHMAD MURAD (TUNISIA) - The Tunisian presidency and government continue their efforts to address the difficult economic and living conditions faced by the majority of the residents. These efforts will develop in two directions.
The first involves negotiations with the International Monetary Fund (IMF) on a financing programme, and the second involves seeking alternatives and other sources of the necessary financing.
Last year, Tunisia reached a preliminary agreement with the IMF for a $1.9 billion loan. However, negotiations later stalled due to Tunisia’s refusal to implement some of the fund’s conditions.
Tunisian political activist Sohaib Al Mazriqi explained that Tunisia’s negotiations with the IMF are ongoing, as the Tunisian Foreign Minister announced. Europe is also making efforts to bridge the views between the two parties to reach a common point that does not affect the country’s sovereignty and does not conflict with national decision-making independence.
The IMF requires the implementation of several reforms to obtain the financing, including reducing the public budget deficit, restructuring state-owned companies, removing subsidies on some products, and devaluing the Tunisian dinar to prevent the Central Bank from using reserves to support the local currency.
Al Mazriqi told Aletihad that Tunisia does not seek to favour one party over the other in its international policy and financial dealings. From this perspective, the Tunisian state has not cut off its relationship with international donors, and it has been engaged in the activities of the IMF since April 24, 1958. However, the fund’s policies sometimes touch on the national sovereignty of countries, which Tunisia rejects during its negotiations, especially regarding the issue of wages and the removal of subsidies on some essential products.
Tunisian President Kais Saied has previously affirmed that the IMF’s conditions are unacceptable and that reducing subsidies causes significant social tensions and affects civil peace.
Al Mazriqi pointed out that there are other alternatives available to Tunisia, as there are several funds and financing entities that it can rely on, such as the African Development Bank and the Arab Bank, in addition to the bilateral borrowing mechanism with some countries.
AlMazriqi emphasised the importance of the “self-reliance” policy mentioned by the Tunisian President more than once. It aims to create wealth and find a new climate that helps develop the economy while taking into account global developments. This includes strengthening the agricultural sector to avoid the food crisis and maintain food security as a main part of Tunisian national security, in addition to developing the industrial, service, energy, and mining sectors, and improving the investment climate.
While Fitch Ratings expects the IMF to approve Tunisia’s financing programme soon, some estimates by economic analysts suggest that the Tunisian economy can withstand without the fund’s programme in the short term, especially with the increase in reserves and marginal adjustment of financial conditions thanks to the rebound in tourism.
Tunisian writer and political analyst Bassam Hamdi explained that Tunisia is heading towards new options, including self-reliance by reforming various sectors and developing production, in addition to some partnerships with Arab countries. However, at the same time, these options are not an alternative to the IMF loan.
Hamdi told Aletihad that Tunisia wants the negotiations with the fund to be based on respect for sovereignty and the independence of national decision-making regarding economic affairs. At the same time, Tunisia does not want to receive dictations from the fund’s administration.
The Tunisian political analyst believes that there is no escape from completing the agreement with the IMF, especially since the public budget deficit is rather large, estimated at approximately 15 billion Tunisian dinars, and Tunisia cannot receive them in the form of loans or grants from other international organisations or brotherly countries, and can only provide them through the IMF. Therefore, it is not possible to avoid dealing with IMF or with the countries of the European Union.