Coronavirus: IMF predicts unprecedented contraction in Tunisia's growth rate

12 Avril 2020

Tunis, Tunisia, April 12 (Infosplusgabon) - The Tunisian economy is expected to contract by 4.3% in 2020 as a result of COVID-19, the worst recession since the country's independence in 1956, the International Monetary Fund (IMF) has announced.

According to reports, the IMF's board of directors on Friday approved a disbursement of SDR 545.2 million (about US$ 745 million or 100% of quota) in favor of Tunisia under the Rapid Financing Instrument (RFI).

This support is intended to help the Tunisian authorities meet the significant needs for financing the budget and the balance of payments estimated at 2.6 and 4.7% of GDP, respectively, according to an IMF press release.

It aims to meet the urgent budget and balance of payments financing needs caused by the COVID-19 pandemic.

IMF funding will support emergency measures taken by the authorities to stem the spread of the virus and mitigate its humanitarian, social and economic repercussions "in a context more uncertain than ever", according to the international monetary institution.

These measures include increasing health spending, strengthening social protection systems and supporting small and medium-sized enterprises affected by the crisis.

In addition, IMF financing will guarantee an adequate level of international reserves and will make it possible to mobilize additional financing from donors.

The authorities are determined to continue to pursue a prudent economic policy and to resume budgetary rebalancing as soon as the crisis subsides in order to ensure macroeconomic stability in Tunisia and the sustainability of its debt, recommended the IMF.

After the deliberations of the board of directors, the deputy director general and chairman of this board, Mitsuhiro Furusawa, underlined that “the Covid-19 pandemic has hit Tunisia hard. It will worsen the already marked budgetary imbalances in Tunisia and will give rise to urgent needs for financing the budget and the balance of payments. The economy is expected to contract by 4.3% in 2020.

“The authorities are also working to limit budgetary tensions, in particular by means of an automatic fuel price adjustment mechanism, urgent measures to save the public service wage bill and a rescheduling of non-priority public investments,” says the IMF chief.

Furusawa suggests that “the mobilization of concessional funding and in the form of grants from external partners is crucial to help Tunisia cope with the crisis caused by Covid-19. This support will also help preserve the sustainability of its debt”.

FIN/INFOSPLUSGABON/MIT/GABON2020

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