On Sunday the 9th of March, Tunisia’s Prime Minister announced the country’s plans to obtain a new loan deal with the International Monetary Fund (IMF), after a cut down in the country’s economic growth forecast.
Prime Minister Elyess Fakhfakh in an interview with the local newspaper Magreb, said the country will experience a growth of 1 percent in the 2020 budget instead of the 2.7 percent earlier predicted. This is due to the impact of the deadly coronavirus crisis which has had an effect on the country’s tourism sector.
While Fakhfakh did not give reasons for the cut in growth forecast, analysts have warned that the global coronavirus crisis would hit the vital tourism sector, as the country’s agricultural sector struggles with a severe shortage of rain.
Tourism is a major generator of foreign currency for Tunisia. Last year, the tourism sector generated revenue of 787.8 million dinars ($262.6 million) of foreign currency which amount to a 35.1 percent increase from the previous year. It also accounts for 8 percent of Tunisia’s Gross Domestic Product (GDP) and generates over 400,000 jobs for people. It is a major source of foreign currency for the country, with records showing around nine million tourists visiting the country in 2019.
Currently, Tunisia needs to borrow about $3 billion internationally in 2020 and obtain the sixth instalment of the current IMF loan deal to help the country secure other external financing and issue bonds as well as meeting spending commitments. “If the IMF delegation does not visit Tunisia until March 20, we will lose a lot,” Fakhfakh said.
In December 2016, Tunisia obtained a $2.8 billion loan package to overhaul its sclerotic economy, including steps to cut chronic deficits and trim bloated public services. IMF gave out $247 billion loan tranche from the deal in June 2019. However, negotiations on a sixth have been delayed due to a political crisis following the October election. The current IMF deal ends in April.
Since the ouster of former prime minister Zine El-Abidine Ben Al, Tunisia’s economy has been struggling to keep afloat, with high inflation and unemployment. There has been a rapid increase in unemployment, with over 15percent of unemployed youths. Some cities record a 30 percent unemployment rate.
In order to keep the country’s economy from further decline, the government is making efforts to control its fiscal deficits and public debt.
By Faith Ikade.
