Tunisia’s central bank governor on Wednesday warned that the country may face economic crisis if it does not enter an urgent bailout deal with the International Monetary Fund (IMF), reported The Africa News.
Tunisia is currently under debt worth nearly 90 percent of its GDP. The government finalized an agreement in principle with the IMF in October, for a package worth around $2 billion. It now needs the IMF’s approval stamp to access other international sources of credit.
“We hope to be able, as quickly as possible, to reach an agreement with the IMF to mobilise the external financing allocated to the budget,” said Marouane El Abassi, Tunisia’s central bank governor.
The North African country’s economy is still reeling from the blow of the Covid pandemic and Russia- Ukraine war, which has increased the price of essential commodities.
The IMF was expected to approve the deal on December 19, but that was delayed.
Abassi said there was a delay in approval of the deal as Tunisia’s budget was not ready.
Among other things, the IMF has also called for a law restructuring for over 100 state-owned firms, which hold monopolies and for some are indebted. The law is currently under discussion and will soon be presented before the cabinet.
Abassi also defended the central bank’s decision to hike its base rate to eight percent, saying it was needed to rein in inflation which he said could hit 11 percent in 2023. While he admitted that the hike in base rate could slow down growth, he stressed that it was necessary to protect the Tunisian dinar. He said that the bank doesn’t have many other tools.
Tunisia’s central bank governor added that the removal of state subsidies on basic goods, particularly fuels would raise prices significantly over the next few years.
