Summary:

In recent weeks, Italy has been pressing hard for progress on the International Monetary Fund (IMF) loan to Tunisia, with the country’s senior leaders stressing the necessity of avoiding economic collapse. Prime Minister Giorgia Meloni and Foreign Minister Antonio Tajani have been actively engaging regional and global powers, emphasizing the urgency of the deal.

The Italian government has also announced a nearly $120 million investment in Tunisia to help keep the country back from the precipice of financial disaster. A worsening of Tunisia’s economic crisis would, in Europe’s view, greatly increase the irregular migration challenge, sending thousands more migrants to Europe in search of economic opportunity. Tajani noted his hope that Italy’s provision of funds to Tunisia would be followed by rapid finalization of the IMF loan deal.

Italy continues to sit at the center of Europe’s irregular migration crisis, with many migrants transiting Libya and Tunisia to eventually attempt crossings to Italy’s outlying islands. Following President Kais Saied’s inflammatory comments about black migrants in February, the challenge has only grown for Europe with thousands more sub-Saharan Africans attempting Mediterranean crossings in recent months that in previous years. Many migrants, including those legally residing in Tunisia, have expressed concerns about their safety following the President’s comments and the vigilante violence against black-skinned individuals that has followed.

Meanwhile, US Secretary of State Antony Blinken joined the chorus of global leaders urging finalization of the IMF deal, calling it “the most critical thing” that can be done to keep Tunisia’s economy from going off the “deep end.” The EU’s senior diplomat Joseph Borrell expressed similar concerns calling Tunisia’s economic situation “very, very dangerous.”

The Tunisian government has continued to characterize global concerns about the economy as “overblown,” remaining less committed to IMF deal than most of the country’s Western partners.

Outlook:  

As pressure on migrants in Tunisia has increased recently and caused an upsurge in migration attempts across the Mediterranean, pressure on European policymakers has risen as well, with patience among many European citizens growing thin. European officials are desperate to see Tunisia stabilized in the short and medium term, likely even in exchange for less comprehensive reform requirements built into the IMF deal.

Italy Foreign Minister Tajani expressed a desire to see greater flexibility from the IMF, a possible indication that Europe may be pressuring a deal that is less disruptive to the current Tunisian economic system. The current list of IMF reforms called for by the Tunisian government would almost certainly prompt significant backlash from Tunisia’s long-entrenched labor unions who have promised to play spoiler to any substantive reform efforts.

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