The International Monetary Fund (IMF) has indicated that it is close to finalizing a financial arrangement that would enable Tunisia to secure a $1.9 billion rescue package. The IMF's Director for the Middle East, North Africa and Central Asia, Jihad Azour, stated in an interview on Tuesday that the organization had worked with Tunisia's authorities and allies to mobilize additional financing assurances, and that the Tunisian government had been progressing on the "prior actions" required to access the funds. However, Azour added that there were still a few things to finalize.
Tunisia reached a staff-level agreement with the IMF in October, but the deal is yet to be reviewed for approval by the fund's directors. A breakthrough is dependent on the implementation of measures by the government and additional support from Tunisia's allies.
Despite President Kais Saied's vow to reject any deal involving spending cuts, the IMF has continued negotiations with the country. Last month, the fund praised Tunisia for its "initial progress" in enacting home-grown economic reforms. However, the IMF has become less optimistic about the country's prospects as negotiations continue. The fund's latest outlook predicts a slower expansion in the economy than it had forecast in October, with inflation on track to pick up more than anticipated.
Tunisian bonds plummeted last month after President Saied expressed opposition to what he referred to as foreign "diktats" that could further impoverish the country. The prospect of significant spending cuts, including for the country's public sector, has led to criticism and threats of strike action from Tunisia's largest trade union.
Azour commented on the concerns surrounding the measures required for the financing arrangement, stating that "there is a real concern about making sure that some of the measures will have the right distributional impact". He added that the IMF wants to ensure that social spending is more targeted, and believes that the reform of the subsidy on energy will achieve this.