Tunisia – IMF – Agreement That Paves Way for Country’s Economic and Financial Rescue, Despite Low Loan Amount (Mohsen Hassan)

Tunis/Tunisia — The agreement with the International Monetary Fund (IMF), under the Extended Fund Facility (EFF), about 1.9 billion dollars, is favorable to the launch of reforms in Tunisia, even if the amount remains low, economist and former Minister of Trade, Mohsen Hassan told TAP.

“However, the Tunisian diplomacy will have to mobilise within the framework of bilateral and multilateral cooperation as well as with international financial institutions”, especially since “the amount of credit, subject of the agreement announced Saturday night by the IMF, is low in view of the needs of the country.

“Even if the special drawing rights (SDR) of Tunisia with the IMF, does not allow it to obtain more than two billion dollars, this agreement will pave the way for external funding and allow it to launch economic and financial reforms and thus reduce in the future, the country’s dependence on international financial institutions and foreign funding and mitigate the impacts of the economic crisis.

He recalled that “this amount will be released over 4 years depending on the progress of the economic reform programme, agreed between the two parties.

In addition, “the agreement with the IMF will allow Tunisia to access other sources of funding (World Bank, African Development Bank, Islamic Bank and other donors). These institutions were waiting for the green light of the fund to lend to Tunisia, which seeks to emerge from its financial crisis and repay its loans and commitments.

The former minister said he was optimistic about the approval of this agreement by the IMF Board in December 2022. In this regard, he stressed the importance of implementing economic diplomacy to lobby influential countries in the CA of the fund, including the United States, but also with other donors and brotherly countries and friends, to obtain the necessary funding for the country.

He said that “this agreement will allow Tunisia to mobilise financial resources in the context of bilateral cooperation, especially since several countries have expressed willingness to help the country to overcome its financial crisis, subject to the agreement with the IMF.

Regarding the exit on the international market, he said it is difficult to resort, even with obtaining this agreement, given the regression of the sovereign rating of Tunisia. However, it is possible to do so with a new guarantee from a foreign state.

Hassan still, emphasized the efforts made by the Tunisian delegation in Washington, including the BCT which has played its full role, through its monetary policy, in addition to the role assumed as an adviser to the government in this difficult mission.

This agreement will pave the way for the economic and financial rescue of the country, especially since the reforms are the subject of a consensus between the Tunisian authorities and IMF experts (reforms of the compensation system, taxation and public enterprises, as well as other reforms that will allow to build a new economic model to mitigate a deplorable economic situation, resulting from structural and specific problems, including the Russian-Ukrainian war and the crisis of COVID-19)

Regarding the Tunisian diplomacy, the former minister praised the role played by the Minister of Foreign Affairs, Othman Jerandi, in the rescue of the national economy since he went to Europe as well as in brotherly and friendly countries and has lobbied international financial institutions for the mobilisation of at least 5 billion dollars

Regarding the social impact of reforms, he called on the government to communicate with citizens and civil society to ensure the success of reforms that will be painful. In this regard, he stressed the need for the government to develop now, policies to mitigate the social impact of such measures.

Regarding the compensation system, the economist considered that it is necessary to put in place a clear strategy of financial transfers to the benefit of low-income social categories but also a strategy of mobilisation of financial resources for the restructuring of public enterprises.

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