Tunisia on Verge of Bankruptcy as IMF Freezes Loan
The International Monetary Fund has postponed the second tranche of a loan worth $350 million to Tunisia because of a lack of progress in reforms covering public sector wage bill, the public finances and state banks.
The IMF urged the acceleration of reforms for Tunisia to be eligible to receive the second and third tranches of a loan that is key to completing the North African country’s 2017 budget.
Despite receiving a first tranche of the loan worth $320 million last June, Tunisia still struggles to implement reforms demanded by the IMF, notably cutting 10,000 public sector jobs and reforming three state-owned banks: Société Tunisienne de Banque (STB), Banque Nationale Agricole (BNA) and Banque de l’Habitat (BH)
The loan freeze by the IMF puts Tunisia on the brink of bankruptcy as other donors such as the African Development Bank, the EU, the US and the World Bank may follow suit by retreating from lending.
Last January, Tunisia announced a voluntary lay-off program to cut civil service jobs in a bid to narrow the budget deficit and reduce the public sector payroll.
According to Tunisian Finance Minister Lamia Zribi “The wage bill in Tunisia rose to 14.4 percent so far and is among the highest in the world. We will cut it to 14 percent by the end of 2017 and about 12.5 percent in 2020.”
Since its 2011 uprising that led to deposing long-serving autocrat Ben Ali, Tunisia has struggled to enact economic reforms meant to curb public spending and help create jobs. Tunisia’s efforts were hindered by a slowdown in the tourism sector, a major source of income, following terrorist attacks in 2015.