Recourse to a loan from the International Monetary Fund (IMF) is becoming “indispensable” in Tunisia to cope with a swelling budget deficit and indebtedness under the effect of the war in Ukraine, the Governor of the Bank estimated on Friday. center (BCT).
The budget deficit, forecast so far at 6.7% for 2022, should be “around 9.7% of GDP”, i.e. three additional points, said Marouane Abassi, Governor of the BCT, during a meeting. a tax forum in Sfax (centre-east). He explained this widening of the deficit by “the Russian-Ukrainian crisis” which increased the cost of energy imports (in particular hydrocarbons) and food (cereals), on which Tunisia is highly dependent.
To prevent these increases from being passed on to the most vulnerable in a country where the minimum wage is very low (125 euros), the State subsidizes these products by drawing on its budget. But the country is already over-indebted (with nearly 100% debt ratio) and can no longer obtain money on foreign markets.
New IMF aid is “indispensable” and even “an imperative for Tunisia”, underlined Mr. Abassi, because it “allows financing at reasonable costs” and has “a leverage effect” to obtain loans “other donors and the international financial market”.
After a year 2020 marked by an “unprecedented” fall in GDP (-8.7%) with the shock of the Covid-19 pandemic, the recovery was “modest” in 2021 with growth of 3.1%, and looks “quite slow” for 2022 at 2.6%, Abassi said, noting that the Statistics Institute forecasts just 2.4%.
The war in Ukraine has strongly affected the euro zone, on which economic activity in Tunisia also depends: according to the BCT, a drop in GDP of 1% in the euro zone this year might result in a drop of around 0.4% in Tunisia.
Tunisia, also shaken by a deep political crisis following President Saied’s coup last July 25, has been asking for aid of around four billion dollars for two years, the third in 10 years.
The IMF called in return for “deep” reforms, in particular a freeze on the huge civil service wage bill, a reform of state subsidies and a restructuring of public enterprises.
Recourse to a loan from the International Monetary Fund (IMF) is becoming “indispensable” in Tunisia to cope with a swelling budget deficit and indebtedness under the effect of the war in Ukraine, the Governor of the Bank estimated on Friday. center (BCT).
The budget deficit, forecast so far at 6.7% for 2022, should be “around 9.7% of GDP”, i.e. three…