Writing for Al-Monitor, Elizia Volkmann reports that “questions are being raised across the political spectrum on whether Tunisia’s long-delayed International Monetary Fund loan will have the positive impact that many hope for. Other observers fear it will be too little, too late to save Tunisia’s drowning economy.”
In her article, she notes:
“This would be Tunisia’s third loan agreement with the International Monetary Fund (IMF), often referred to as the lender of last resort. The country currently owes the IMF $2.01 billion USD. Many fear that with or without the loan, Tunisia’s road to recovery will be a troubled one, especially as Moody’s has already stated that it will review and possibly downgrade Tunisia’s current Caa1 bond rating, flagging it as a country at high risk of default.
Tunisia’s increasingly popular far-right Free Constitution Party (PDL, Partie Destourien Libre), led by Abir Moussi, has gone so far as to pen a letter on Oct. 24 to the director of the IMF, following the staff-level agreement to loan Tunisia $1.9 billion USD. (That decision is not yet final.)
Moussi warned that Tunisia is not currently in a fit state to take on a new loan agreement and demanded greater transparency. No agreement should be signed that “citizens had not seen or discussed democratically in the competent legitimate institutional frameworks,” she stated.”
— Al-Monitor (@AlMonitor) October 31, 2022
Also political commentator Haytham El Mekki is quoted in the article, stating:
“I don’t think the government will be able to stick to its promises to the IMF, especially under growing social pressure…I’m afraid the first part of the loan may be the last one we receive.”
He adds he is not convinced that more borrowing is the way forward. “According to the IMF itself, if we keep on this path we will hit 100% (debt to GDP) by 2025. Our debt is growing,” he said.
Tunisia’s debt to GDP rose sharply in the last three years, according to Data website Statista, as from its pre-pandemic level at the start of Kais Saied’s Presidency of 68.97%, it rose to 87.92% this year.
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