Summary:

During the week of 7 November 2022, the Tunisian government reached an agreement to sell 60% or more of the capital of El Fouladh, an iron and steel producer. The sale will be made to an undisclosed “strategic partner” and the public Tunisian banks were supportive of structuring the deal. El Fouladh has reportedly accumulated a net loss of several hundred million dinars over recent years.

Outlook:  

The sale of El Fouladh may mark the initial movements toward privatization aligned with the International Monetary Fund (IMF)-outlined reforms tied to the $1.9 billion loan agreement reached on 15 October 2022. The El Fouladh sale likely represents the low-hanging fruit of privatization efforts, particularly given the firm’s unsustainable financial performance. However, we anticipate more tension, public outcry, and posturing by the labor unions as IMF-linked reforms begin in earnest. These efforts may not commence until the IMF’s Executive Board ratifies the loan deal in December 2022.