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Tunisia : IMF Announces Staff-Level Agreement with Tunisia on the Fourth Review of the Stand-By Arrangement

July 17, 2014

A mission from the International Monetary Fund (IMF), led by Mr. Amine Mati, visited Tunis during June 10 24, 2014 to conduct discussions on the fourth review of Tunisia s economic performance under the 24-month Stand-By Arrangement (SBA) approved by the IMF Executive Board on June 7, 2013. The mission held productive discussions with senior government and central bank officials. It also met with representatives of the banking and private sectors, trade unions, parliamentarians, the donor community, and civil society.

At the end of the discussions, Mr. Mati issued the following statement:

The mission welcomes the progress made in pushing ahead with policies to preserve macroeconomic stability and generate higher and more inclusive growth in a challenging national and international environment. In view of this, the IMF mission reached staff-level understandings on the fourth review under the SBA detailed in an updated Memorandum of Economic and Financial Policies.

The announcement of a clear calendar for the legislative and presidential elections to be held before the end of 2014 is a key achievement in Tunisia s transition to democracy. This increased clarity at the political level will bolster confidence in the Tunisian economy, and reduce investors wait-and-see attitude. However, the economic situation remains fragile with growth not high enough to make a significant dent in unemployment, in particular, amongst the youth.

Economic activity remains modest. Growth estimates for 2013 have been revised down to 2.3 percent. GDP will expand by 2.8 percent in 2014, with the good performance of the agricultural sector helping offset weaker than expected activity in the tourism sector. After having declined to 5 percent at end-March, headline inflation is on the rise, reaching 5.7 percent at end-June 2014, driven mainly by higher food prices. Tunisia s external imbalances have been widening, putting pressures on gross foreign reserves and the exchange rate, which has been depreciating.

The authorities reform program remains on track, with all end-March quantitative performance criteria met and those for end-June expected to have been met. The indicative ceilings on social spending and current primary spending were met, despite some wage overruns.

Fiscal performance was stronger than-expected during the first five months of the year, thanks to considerable revenue mobilization. Additional wage payments and pension transfers put pressure on attaining the end-year fiscal target, but additional revenue measures and savings on expenditures ensure that fiscal consolidation remains on track. The ongoing reduction in energy subsidies is a welcome development and is necessary to lower energy consumption and create fiscal space for priority spending on health and education.

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Source: TendersInfo (India)

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