Tunisia is About to Launch a Strict Reform Package to Revive the Economy

  • Tunis, Republic of Tunisia
  • 1 February 2021
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Tunisian Minister of Finance and Economy Ali Kooli pointed out, "Tunisia is planning to issue bonds this year that may reach three billion dollars, while seeking a billion-dollar loan guarantee from the administration of US President Joe Biden," explaining that "Tunisia is preparing to pay record debts in 2021 and launch an urgent and potentially painful reform package to revive its ailing economy."

Al-Kooli revealed that Tunisia intends to issue sukuk in the local market with a value of 300 million dinars in the first half of the year, and is also likely to issue sukuk in the international market at a later time.

With a fiscal deficit of 11.5 percent last year, and a public debt exceeding 90 percent of GDP, Tunisia is also planning urgent reforms to address the extremely high public wage bill, cut subsidies and restructure poorly performing state-owned enterprises. Public wages in Tunisia are more than 20 billion dinars this year, out of the country's total budget of 52 billion dinars.

"We are in a difficult situation, but this does not mean that we are not in a position to pay salaries or pay our debts, as Tunisia can pay the payments that are due in the first half of 2021," Ali Kooli stressed.

In 2021, Tunisia will need loans of about 19.5 billion dinars (7.2 billion dollars), including foreign loans of about five billion dollars. Debt payments due this year will reach 16 billion dinars, a high record, up from 11 billion dinars last year and eight billion in 2019, while it did not exceed 3 billion in 2010.

Tunisia is hoping to obtain a loan guarantee from the United States to facilitate its bond market mission. The government also hopes to reach an agreement with the International Monetary Fund on a new financing program, and that the recent consultations under Article 4 were a step towards that.

Source (Asharq Al-Awsat Newspaper, Edited)