Tunisian President looks to taxes to shun IMF bailout

Tunisian President Kais Saied is set to reject IMF conditions for a $2 billion loan and looks instead to raise taxes on the wealthy to fill in drained state coffers, in yet a new populist move that has little effect on the country’s soaring external debt and due payment deadlines.

Saied who has consolidated his firm grip on power has previously said his country refuses dictates of the IMF which urged him to cut the civil service payroll and reduce subsidies as well as to privatize state companies.

Tunisia and the IMF have reached a deal on the bailout in October but the President asked for the deal to be removed from the agenda of the executive council over conditionalities involving painful reforms he is unwilling to take.

“Instead of lifting subsidies in the name of rationalisation, it would be possible to introduce additional taxes on those who benefit from them without needing them,” Saied told his finance minister.

The measure might alleviate some of the domestic debt burden but would not be efficient in tackling Tunisia’s foreign debt and the spectre of default.

The financial meltdown in Tunisia has spilled over to the daily lives of citizens who now have to queue for basic goods and struggle with a shortage of medicine due to the government’s import cuts to reduce the pace of the depletion of hard currency.

Without an IMF deal, Tunisia would find it extremely hard to access the international debt market as rating agencies warn the country heads straight to a default.