Summary:

On 15 October 2022, the International Monetary Fund (IMF) announced a staff-level agreement with the Tunisian government on a $1.9 billion dollar loan to address the country’s ongoing economic struggles. The agreement, which must be ratified at a December meeting of the IMF Executive Board, lays out numerous steps expected of Tunisia as the recipient of the loan. The IMF’s stipulations touch on government subsidies, tax equity, public sector enterprise reform, and climate impacts while acknowledging the urgency of the economic situation as inflation and rising consumer goods prices erode the purchasing power of Tunisians.

Outlook:  

While likely to be approved at the December IMF Executive Board meeting, commentators largely agree that the IMF loan will not repair the issues weighing on the Tunisian economy. The staff-level agreement stipulates sweeping reforms in general terms, but whether or not the public appetite for such reforms exists remains to be seen. The willingness to pursue good-faith negotiations by key players, most notably major labor unions like UGTT and UTICA, will determine the success of any meaningful reforms. The public will also have a voice, as low-income Tunisians may be confronted with prices that are not artificially suppressed by government intervention.