Press Release No. 07/279

Press Release: IMF Deputy Managing Director Murilo Portugal's Statement at the Conclusion of his Visit to Tunisia

November 29, 2007

Mr. Murilo Portugal, Deputy Managing Director of the International Monetary Fund, issued the following statement today in Tunis at the conclusion of his visit to Tunisia:

"It has been a pleasure to return to Tunisia, my second visit as Deputy Managing Director of the International Monetary Fund. I participated in the important conference on the Role of the Private Sector in Economic Development and Regional Integration in the Maghreb, which benefited from an excellent organization by the Tunisian government. Participants included delegations from the five Maghreb countries, private sector representatives, including the Maghreb Employers Union (UME), the representative of the Arab Maghreb Union (AMU), and the representative of the Union of Maghreb Banks.

"The conference was preceded on November 26-27, by a technical meeting of officials from the government authorities, agencies and institutions represented, as well as private sector representatives. Following the Algiers conference in November 2005 on Trade Facilitation and the Rabat conference in December 2006 on Financial Sector Reform and Financial Integration, this was the third conference on strengthening regional cooperation and promoting deeper economic integration in the Maghreb. Discussions focused on the role of the private sector in economic development and regional integration in the Maghreb, after assessing progress achieved over the past year in the areas of trade facilitation and of financial sector reforms and financial integration.

"The important growth-enhancing reforms undertaken by all the Maghreb countries over the past two decades have resulted in stable macroeconomic conditions, an accelerating rate of real GDP growth and rising living standards. Despite these impressive achievements, the Maghreb faces the overarching challenge of reaching an even higher sustained economic growth to reduce the still high unemployment rates and improve living standards faster.

"All participants agreed that the Maghreb needs the private sector to become the cornerstone of the strategy aiming to permanently increase growth by dynamizing investment and productivity. Indeed, the public sector presents little scope for higher investment and new job opportunities given the limited fiscal room, particularly in the non-oil producing countries. Higher private investment, including foreign direct investment, would contribute to higher productivity through learning-by-doing and technology transfer.

"Participants also agreed that, building on the major reforms already underway, additional progress is needed in all Maghreb countries to boost investment and productivity. Therefore, they agreed to increase the pace of reforms in intra-regional trade and modernization of financial systems while advancing regional financial integration. They also agreed that a favorable investment climate is essential to foster investment and growth.

"During this conference, representatives from the Maghreb countries adopted a detailed action plan and a report on its implementation which was prepared after the Rabat Conference. In addition to persevering with these reforms, they decided to accelerate the implementation in each country of the action plans that originated from the two previous conferences in Algiers and Rabat.

"I praised the participants for adopting the action plan on promoting the role of the private sector in economic development and regional integration in the Maghreb. There is a powerful synergy between regional integration in the Maghreb and the rise of a dynamic private sector in each of the countries of the region. This point came out clearly from previous conferences on Maghreb integration. It is easier for member countries to reform their economies if their policy impetus is part of a larger regional effort.

"Participants agreed to set up a joint committee, comprised of representatives from the private and public sectors from the five countries, that will be responsible for preparing a program of detailed measures to be presented to Ministers and Governors at the time of the 2008 Spring meetings of the IMF and the World Bank. This committee will implement and follow up on the action program adopted by Ministers and Central Bank Governors.

"Participants accepted the proposal of the Libyan delegation of organizing the fourth regional conference in Tripoli. The theme and the dates of that conference will be announced at the time of the 2008 Spring meetings of the IMF and the World Bank.

"During my stay in Tunis, I was also privileged to meet the Prime Minister, Mr. Mohammed Ghannouchi and the Governor of the Central Bank of Tunisia, Mr. Taoufik Baccar.

"Our discussions confirmed that we share the same views on Tunisia's realizations and principal challenges. Tunisia's outward-oriented development strategy and effective economic management over the past decade resulted in strong growth and macroeconomic stability.

"Tunisia's key challenge is to reduce unemployment while facing a rapidly increasing number of university graduates. This is the overarching objective of the XI^th Plan, which seeks to boost annual growth to over 6 percent over the medium-term by putting progressively in place the foundations of a knowledge-based, high value-added economy, while deepening its global integration. The strategy presented in the Plan is ambitious, yet achievable if Tunisia reinforces its macroeconomic position and advances its structural reforms.

"Tunisia is making impressive progress in its reform agenda and its prospects are favorable. I commended the Tunisian authorities for their financial sector reforms, which have significantly improved prudential indicators in the past three years, and I encouraged them to persevere in that area. I lauded the Tunisian authorities for their prudent conduct of fiscal policy and the consolidation of their fiscal position, including through their planned overhaul of the social security system. I welcomed the authorities' advances to strengthen the Tunisian monetary and exchange rate policy framework and noted the recently announced measures to develop the money and foreign exchange markets. I congratulated the authorities for continuing to open up the Tunisian economy while encouraging and facilitating the adjustment of the domestic economy to heightened competitive pressures."