The Board of Directors of the International Monetary Fund (IMF) has reprogrammed the Tunisia dossier, which was on the agenda of its meeting 19 years after Tunisia. According to experts, this is an unusual situation in the practice of the institution.
Therefore, if the preliminary contract granting the loan remains in force, it is necessary to await the next meeting of the Board of Directors in order to hope for the release of the file. Not to mention that there is currently no explanation as to the reasons for postponing the final examination of the Tunisian file. Tunisia, which wants to collect the first installment quickly, has to wait anyway while it is mired in an acute economic and financial crisis. Some even fear the worst, namely that the institution will not reverse the preliminary agreement.
In the absence of an explanation from the IMF, there is speculation about the reasons and consequences of this deprogramming, which represents a rejection of the dossier by the board of directors.
Firstly, for some experts, the withdrawal of the Tunisian file is explained by the fact that the Tunisian President Kaïs Saïed has not yet signed and published the Finance Law of 2023. The Board of Directors examines its content and ensures that it effectively corresponds to the spirit of the signed preliminary agreement.
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The document aims to give an idea of the Tunisian government’s will to start implementing the reforms that have been long and hard negotiated between the Tunisian authorities and the Bretton Woods institution. However, the document sent to the Board of Directors was not signed by the Tunisian President. Consequently, it is considered invalid by the institution. In addition, its content is seen as contradicting the commitments made by the Tunisian delegation following negotiations with the IMF, particularly with regard to payroll.
Then others judge that the postponement is explained by the Tunisian authorities’ inability to secure firm loan commitments from other countries and multilateral financial institutions (MFIs), knowing that the IMF is not funding the reform program. However, due to the freedom and democracy policies pursued by President Kaïs Saïed, Tunisia has found it difficult to obtain financial support from Western countries, but also from MFIs. As a result, IMF funding, even if released, would not be enough to help the country embark on the reforms needed to emerge from the financial crisis it is going through.
One of the key points of this agreement also concerns the reforms that Tunisia is to request in return for the loans granted by the IMF. And unfortunately, the institution’s teams are far from trusting the Tunisian authorities on this point, knowing that the country’s previous governments rolled them in flour and called in the loans without ever delivering on the reform packages they were a part of , to put into practice.
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In addition, the guarantees regarding the implementation of the reforms are one of the reasons for the length of the talks between the two parties. Although the Tunisian authorities appear to be showing certain signs of confidence on certain aspects of the reforms, notably on the phasing out of subsidies for fuel and certain basic necessities, the contradictory statements at the state summit are worrying the IMF. President Saïed did not hesitate to indicate that he disagreed with the team that negotiated the deal with the IMF. In addition, the attitude of the powerful trade union federation UGTT, which is opposed to the reforms, raises serious problems. Therefore, the Tunisian government’s credibility is a real problem.
Consequence: The final agreement to receive the $1.9 billion loan will not be signed in 2022, while the governor of the Central Bank of Tunisia, Marouane Abassi, has announced that the first tranche of the loan will be released before the end of the year. What is almost certain is that this indefinite postponement, with no fixed date, is worrying Tunisia. What is almost certain is that it will have to wait until 2023 to start new negotiations in order to save the preliminary contract. Only for Tunisia is time running out and the authorities must correct the situation quickly if they want to benefit from the IMF loan.
One thing is for sure, with foreign exchange reserves near the critical threshold of 3 months of imports of goods and services, Tunisia, which has to cope with falling debt, urgently needs this IMF loan, which would greatly open the financing tap from other countries and MFIs.
Furthermore, without these resources, the country on the brink of default will not be able to tap the debt market to find the financing needed for its 2023 budget and economic recovery.
Clearly, this deprogramming risks worsening the situation in a country that has been plagued by a multidimensional crisis for a dozen years and that continues to sink because of the decisions of its leaders.