Press Release No. 22/267

IMF Staff Concludes Mission to Tunisia with Good Progress

July 19, 2022

• The Tunisian authorities and IMF staff made good progress on the parameters of the authorities’ economic policies and reforms to be supported by an IMF program. Discussions will continue over the coming weeks.
• The authorities are advancing with their economic reform agenda to maintain macroeconomic stability, support inclusive growth, and strengthen social safety nets as well as tax equity.
• We welcome the openness of the government and social partners for a constructive dialogue on implementing a socially-conscious and growth-friendly reform program.

Tunis, Tunisia: An International Monetary Fund (IMF) mission led by Björn Rother visited Tunis from July 4 to July 18 to discuss potential IMF financial support for the authorities’ program of economic policies and reforms. At the end of the mission, Mr. Rother issued the following statement:

“Discussions on a new Extended Fund Facility (EFF) to support the authorities’ economic policies and reforms have been productive. They will continue over the coming weeks towards reaching a staff-level agreement. As is always the case, final agreement on a program arrangement would be subject to approval of the IMF's Executive Board.

“The authorities are making important progress with their economic agenda, coordinating well across ministries and agencies around a shared vision that is sound. It is now critical to accelerate implementation of this agenda.

“The Tunisian economy is suffering from the economic impact of the Ukraine war that came as a major external shock on top of the Covid-19 pandemic. These pressures add to the economy’s underlying structural weaknesses. The near-term outlook is challenging, as growth will likely decelerate while higher international prices for energy and food are adding to already high inflation and are increasing fiscal and external deficits and debt. Urgent measures are needed to reduce these imbalances in a socially sustainable manner.

“IMF Staff supports the priorities of the authorities’ program of economic policies and reforms. It is important to build on the recent progress made to improve tax equity, expand coverage of social safety nets and increase cash transfers, turn around loss-making public enterprises, and contain current public expenditures. The latter will require reducing the growth of the civil service wage bill during the years ahead and gradually phasing out energy subsidies through regular price hikes that link domestic prices to global prices for oil and natural gas. It is equally important to strengthen tax equity by bringing in the informal sector into the tax net and ensuring stronger contributions from liberal professions. As critical will be swift progress with ongoing efforts to strengthen the social safety net and expand its coverage to compensate for the impact of higher prices for administered goods through cash transfers to vulnerable households and also some relief to the middle class. The Central Bank of Tunisia has started monetary policy tightening to protect the purchasing power of Tunisians in the face of high and accelerating inflation. We agree that this action should continue in the time ahead.

“We welcome the openness of the government and social partners for a constructive dialogue on implementing a socially-conscious and growth-friendly economic program. We hope that social partners and other important stakeholders can unite around this effort. Broad buy-in will be essential to accomplish the urgent task of reducing macroeconomic imbalances, shore up stability, and support the job-creating growth that is required to activate the substantial economic potential of Tunisia for the benefit of all Tunisians.

“The international community will need to again play an important role in facilitating the authorities’ program through the rapid release of financing. This will be indispensable to ensure the success of the authorities’ policy and reform efforts.

“The mission met with Head of Government Najla Bouden Romdhane, Minister of Finance Sihem Boughdiri Nemsia, Minister of Economy and Planning Samir Saïed, Minister of Social Affairs Malek Zahi, Minister of Industry, Mines and Energy Neila Nouira Gongi, Minister of Commerce and Export Development Fadhila Rebhi Ben Hamza, Minister of Agriculture, Hydraulic Resources and Fishing Mahmoud Elyes Hamza, Minister of Health Ali Mrabet, Minister of Technology and Communication Nizar Ben Neji, Minister of Transport Rabi Majidi, Minister of Environment Leila Chikhaoui, Minister of Tourism Mohamed Moez Belhassine, Central Bank of Tunisia Governor Marouane El Abassi, as well as their staff. It also held discussions with the UGTT labor union and the UTICA and CONECT employers’ federations, civil society, development partners, and the diplomatic community. The mission would like to thank the Tunisian authorities and all those with whom it met for their warm welcome and the frank and productive discussions.”