Summary:

On 6 April 2023, President Kais Saied indicated in a press conference his strongest opposition yet to the International Monetary Fund (IMF) loan deal and its requirements for economic reform. Saied expressed frustration at the imposition of “instructions from abroad,” and insisted that Tunisia has the power to emerge from the current economic crisis on its own.

President Saied’s assessments fly in the face of recent assessments from the World Bank, the European Union, and the US which indicate that Tunisia is on the brink of an economic catastrophe. Most current assessments indicate that a major influx of funding from the IMF is the only option for forestalling economic calamity.

Following President Saied’s statements, the country’s bonds in US dollars, euros, and yen all fell sharply. Tunisian bonds already trading at the “distressed” level fell further in value and pushed the country closer to a potential default on its sovereign debt that greatly exacerbate the already acute economic crisis.

Outlook:  

President Saied’s more explicit statements in opposition to the IMF loan only confirm that hesitance he has long-signaled. Despite his endorsement of a budget that includes the IMF loan, he appears determined to assert some sense of Tunisian independence and autonomy in the process, even as the country remains utterly dependent on foreign funding to continue to operate.

The Tunisian economy continues to move closer to the possibility of significant disruption, particularly as the government looms at the edge of default. The risk of major economic fallout is growing, even as the public sector secures short term gains. The risk of significant instability and civil unrest continues to grow as potential solutions to the economic crisis grow scarcer and more painful.

Explore our services or speak with our team of North Africa-based risk experts.