Tunisia Expects $1.8 Billion IMF Accord by MayAlaa Shahine
Tunisia expects to sign a $1.8 billion loan accord with the International Monetary Fund by May to shield the economy from Europe’s debt crisis and political turmoil at home that’s hindering the transition to democracy.
An IMF team will arrive in Tunisia for talks on April 8 before another meeting in Washington later this month, Finance Minister Elyes Fakhfakh said in an interview at Bloomberg’s Middle East headquarters in Dubai.
The assassination of an opposition leader in February and the debt crisis in Europe, Tunisia’s main trade partner, have shaken investor confidence in the North African country more than two years after a popular uprising that set off a wave of revolts in the region.
“We are still in this transition process,” the 41 year-old member of the secular Ettakatol party said. “There are still some risks so we decided to engage in these negotiations with the IMF in case there is domestic or external turmoil.”
He said Tunisia and the IMF “are in agreement on about 95 percent of the program” as they work on the final wording of the accord.
The government expects Tunisia’s economy to expand 4 percent this year compared with 3.6 percent in 2012, propelled by industries such as chemicals and mining as well as tourism and agriculture, Fakhfakh said. The budget deficit may widen to 5.9 percent of economic output from 5.1 percent as the government accelerates spending plans aimed at developing Tunisia’s interior region to create jobs.
“In Tunisia there were two speeds of growth, and this is one of the reasons for the revolution, that the interior region was behind in terms of development, infrastructure and investments,” Fakhfakh said. “We decided to increase investments in those areas.”
The government plans to ask the U.S. Treasury to guarantee about $500 of bonds this year and may raise the equivalent of $400 million in Samurai bonds, the minister said. The country raised $485 million last year in bonds backed by the U.S. Agency for International Development in July at a coupon of 1.686 percent.
Unrest surfaced during the December anniversary of Tunisia’s uprising and turned into violent protests after the killing of Democratic Patriots leader Chukri Beleid on Feb. 6. That prompted Standard & Poor’s to cut Tunisia’s credit rating on Feb. 19 for the third time since 2011.