Summary:

During a 2 May 2023 interview, the International Monetary Fund (IMF) Director for the Middle East, North Africa, and Central Asia, Jihad Azour, commented positively about progress toward a loan deal with Tunisia, stating “the good news is we are almost there.”

Azour noted that the IMF still needed to “ensure that there is enough financing” for the $1.9 billion loan deal which was agreed to in principle in late 2022 but has been delayed as the IMF waited for the Tunisian government to implement the agreed-upon reforms.

Since the initial agreement, the IMF has conservatively alluded to “progress” on the IMF deal with Tunisia while rarely providing significant details. However, on the Tunisian side, the level of commitment to the deal has been difficult to discern with President Kais Saied showing a growing hostility toward the deal. This culminated in early April when the President indicated in a press conference that he was not supportive of the deal and would not submit to foreign diktats.

However, shortly after the President’s comments a Tunisian delegation was dispatched to Washington, DC to participate in the IMF and World Bank Spring Meetings. The delegation appeared intent on working constructively toward a deal.

The latest announcement from the IMF indicates that the process continues with no indication that the underlying agreement in the original deal has changed.

Some European countries, led by Italy, have been pressing more openly for consideration of a bailout for Tunisia not tied to austerity measures. This bloc views a short-term bailout of the Tunisian economy as essential to preventing an increase in irregular migration through Tunisia to Europe.

Outlook:  

Despite the inconsistent messaging regarding the IMF loan deal out of Carthage, the IMF has consistently indicated that incremental progress was being made. The most recent statements from IMF leaders make it increasingly likely that a deal is, in fact, close to being finalized.

While the international community is largely in agreement that Tunisia’s economic situation necessitates a sizeable loan deal, the domestic view of a loan deal is less clear. Many Tunisians are in favor or view it as a necessity. However, many others have been open to President Saied’s view that the loan will hurt Tunisians and lead to further foreign influence on Tunisia’s future. Growing negative sentiment toward outside powers meddling in Tunisia, whether substantiated or not, may prove powerful should a deal be finalized.

Tunisia’s influential unions have clearly expressed their concerns with the IMF loan deal and are the most likely actor to push for meaningful resistance. Protests and demonstrations are likely to continue as rumors of deal finalization continue.

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