Summary:

Despite recent cautionary messaging from the European Union (EU) about Tunisia’s political direction, the EU has agreed to grant Tunisia €100 million to aid the country’s post-pandemic economic recovery. Some funds are intended to support the distribution of social aid to households and businesses, while other funds aim to alleviate pressure generated by supply chain disruptions caused by the Russian war in Ukraine.

Outlook:  

This EU aid comes on the heels of the recent agreement in principle on a loan deal with the International Monetary Fund (IMF), as well as the extension of credit by two regional development funds. Our team is watching how the influx of funds impacts the overall economic climate, particularly as tangible steps are attempted toward the reforms insisted upon by the IMF. We anticipate increasing tensions between the Tunisian labor unions and the government given initial signals of intransigence from labor union leaders.