Summary:

On 9 October 2023, Tunisia officially returned €60 million in European Union (EU) financial assistance in an expression of frustration with how the EU is implementing a July 2023 agreement with EU Commission, according to Foreign Minister Nabil Ammar. 

In an interview, FM Ammar explained that the €60 million in funds was actually attached to a separate funding deal but accused Europe of disbursing it as if it were part of the new assistance deal. 

Senior EU Commission official Oliver Varhelyi confirmed in a Twitter/X post that the funds were tied to a 2021 assistance package and Tunisia was free to return the funds. Varhelyi appeared to express confidence that the assistance deal could move forward. 

President Kais Saied indicated that Tunisia would not accept “charity,” nor would Tunisia accept sympathy if not delivered with respect.  

Meanwhile, the International Monetary Fund (IMF) Director for the Middle East and Central Asia Department Jihad Azour indicated that Tunisia has not provided a counterproposal to the IMF after an agreement on reforms and nearly $2 billion in funding stalled throughout 2023.  

President Saied made it clear in early May that he would not accept the previously agreed-upon terms of the IMF loan deal, calling the requirements for economic reform contained in the deal “foreign diktats.”  

Outlook:  

As Tunisia’s tourism season comes to a close, the economic strains on the country will likely be felt more acutely, particularly as leaders look ahead to prepare the 2024 budget.  

Tunisian officials have already insisted that subsidies will not be changed in the 2024 budget, putting at risk the potential for any large-scale loan deal with the IMF or the EU which had offered nearly $1 billion in funding should the IMF loan deal be finalized. 

Tunisia is in a precarious economic position and increasingly isolated from key partners. There are currently limited options for external partnerships that could provide economic relief tied to the IMF loan and EU assistance packages.  

However, as the global geopolitical and economic environment evolves, Tunisia could continue to seek out funding in the Gulf or Asia with less stringent demands for reform. 

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