Summary:

On 21 February 2024, Sultan al-Marshad, the CEO of Saudi Arabia’s Saudi Fund for Development (SFD) visited Tunisia indicating imminent plans to invest in revitalizing the rail transport network that supports Tunisia’s phosphate sector.

In the following days, the Saudi government announced that al-Marshad and Minister of Economy and Planning Feryel Ouerghi signed a $55 million “development soft loan agreement” that will finance the “renewing and developing” of the railway network that facilitates phosphate transport. A soft loan is broadly considered a loan that is offered under conditions favorable to the recipient.

In mid-2023, Saudi Arabia agreed to provide Tunisia with financing and donations totaling $500 million as it became increasingly clear that Tunisia’s planned loan deal with the International Monetary Fund (IMF) was unlikely to move forward.

Tunisia’s phosphate sector has long held significant economic potential, but has struggled with production and transport issues, many of which are related to ongoing labor disputes.

In recent months, China has also expressed interest in investing in the development of Tunisia’s phosphate resources.

Outlook: 

Saudi Arabia continues to maintain an active interest in Tunisia’s development as it looks to assert itself in a regional leadership role.

With Saudi Arabia and other Gulf states looking ahead to the post-Gaza war period, there is already efforts underway to communicate that normalization with Israel will be a priority. Saudi Arabia’s investment in Tunisia and elsewhere could be linked to diplomatic agreements for some level of support for this effort once the war reaches a conclusion.

Through promises of ongoing investment at a particularly vulnerable moment in Tunisia’s economic life, Saudi Arabia may be seeking to shore up future Tunisia cooperation in a regional movement toward normalized relations with Israel.

For now, Tunisia is not necessarily in a strong position to turn away additional creditors and investors, particularly after turning aside from a $2 billion IMF deal.

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