Summary:

This week, the International Monetary Fund’s (IMF) Managing Director Kristalina Georgieva stated in an interview that the Tunisian government had made “very good progress” on the reforms laid out by the IMF. The IMF board decision on the substantial loan has been delayed multiple times, having been originally scheduled for December 2022. However, Georgieva’s comments indicated that an opportunity for Tunisia’s loan application to go before the IMF board could be “weeks – not months” away, a signal that progress has been made.

Outlook:  

With Tunisia’s 2023 budget explicitly dependent upon receiving the IMF loan, progress toward a board decision is a positive step toward economic stability, at least in the near term. However, the country’s powerful labor unions, most notably the Union Générale Tunisienne du Travail (UGTT) have committed to playing spoiler to any attempts at substantive reform within the country’s sprawling public sector. As an IMF decision nears, accompanying announcements of the requisite reforms planned by the administration will likely result in pushback from the unions, large-scale demonstrations, and civil unrest.

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