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· Tunisia is presently engaged in restructuring it fragile economy before approaching the International Monetary Fund for loans, according to the country’s Economy and Finance Minister, Ali Kooli
· The IMF in January had given a long list to Tunisia to accomplish before going for the loan
· They included cut in salaries and handouts to help rein in the budget deficit. However, experts feel that in the given situation, such harsh measures could add fuel to the protests, though it may appease the investors
Tunisia is presently engaged in restructuring its fragile economy before approaching the International Monetary Fund for loans, according to the country’s Economy and Finance Minister, Ali Kooli. He added that he would be taking radical steps to salvage the fledgling Tunisian economy. However, he did not specify what those steps are. There are reports that the government proposes to reduce working hours for public sector workers to cut public spending on wages and other overheads, as recommended by the IMF.
There are massive protests in the North African country over unemployment and poor living conditions. Protests have been continuing for more than one month. Protests are happening in the country for more than a month and apprehensions are that it could get even worse. There are speculations that the tough decisions by the government would include wage cuts, reduction of subsidies, and restructuring loss making state-owned companies, which can lead to retrenchments. The country has been hard hit by the coronavirus pandemic and in 2020, its economy contracted 8.2 per cent. Unemployment among youth is at 36.5 per cent.
The IMF in January had given a long list to Tunisia to accomplish before going for the loan. They included cut in salaries and handouts to help rein in the budget deficit. However, experts feel that in the given situation, such harsh measures could add fuel to the protests, though it may appease the investors.
Tunisian authorities are also contemplating a maiden sovereign sukuk (gold) issue to help plug the budget deficit projected at between US$US4 billion and US$5 billion in 2021. This would help them to mobilize resources from financial markets in the Middle East, Asia or even the U.S. There is also advice coming from various quarters not to go for tough measures at this time when the country is facing hardships stemming from Covid-19 and massive unemployment. Some experts feel that the government should explain to the IMF that at least for 2021,major economic reforms should not be carried out.
