Oil-rich Libya has invested $200 million in Tunisia’s Central Bank in an effort to assist its North African neighbour as it grapples with the aftermath of the violent Arab Spring unrest of two years ago. Tunisia’s president Moncef Marzouki made this disclosure this week, adding the central bank received this money as a gift to help the Tunisian economy.
He made this statement as Libya’s leader of congress, Mohammed Magarief, visited Tunisia.Tunisia’s new government has tried to take all the right steps to bolster its economy. However, it has found that events beyond its control have stymied its efforts.
It has found that jump-starting the economy would be much harder than previously thought. Under the leadership of the ruling party, the Islamist Nahda Party, the government in Tunis has won international funding to invest in jobs programmes to employ the restless youth who led last year’s revolution.
Government has obtained $485 million of loan guarantees from the US and a $600 million samurai bond from Japan. Slim Besbes, finance minister, has announced that the country would issue $635 million of Islamic bonds, the first time the country has issued such financial instruments. The World Bank is likely to approve a budget support loan of $500 million by the end of the month.
The country’s international image – and tourism industry in particular – has also been hit by groups of violent and “lawless puritanical” Islamists called Salafis, who are accused of being behind an attack on the US embassy in Tunis in September and have tormented alcohol vendors, artists and foreign visitors in their pursuit of establishing an Islamic state, according to the Financial Times.
Moreover, a combination of global economic trends and the country’s own lack of capacity has hindered the ability of reforms to help improve the economy, spelling trouble not just for Tunisia but for other North African countries seeking to recover from the political tumult of the Arab spring revolutions.
“They made a gargantuan effort to accelerate the implementation of public investment projects,” Antonio Nucifora, chief economist for the World Bank in Tunisia said this week. “The reality is that this is complex. They’ve made improvements but it’s not accelerating at the rate they would like.”
Tunisia was the first country to overthrow its dictator in a wave of anti-government revolutions continuing to roil the Arab world. More quickly than Egypt, Libya or Yemen, it held elections, launched a political transition and began hunting around for capital to fix its economy.