IMF says loan talks with Tunisia to continue over coming weeks

TUNIS (Reuters) – The International Monetary Fund (IMF) said its talks with Tunisian authorities for a staff level agreement on a rescue package would continue “over the coming weeks” as the government seeks to stave off a collapse in public finances.

It said it had made “good progress” in talks with the authorities over a reform package the government is proposing as part of the overall deal.

Tunisian officials had previously indicated they hoped to reach an agreement earlier this year as they seek $4 billion in financial assistance.

Tunisia’s efforts to secure IMF support were delayed for months by political turmoil in Tunis after President Kais Saied seized most powers, ousting the government and parliament last summer.

Next week, he will hold a referendum on a new constitution that will formalise the greatly expanded powers he has assumed, though most political parties have rejected the move.

Tunisia has proposed cuts to the public sector wage bill, subsidies and to the costs of maintaining loss-making state-owned companies.

“The authorities are making important progress with their economic agenda, coordinating well across ministries and agencies around a shared vision that is sound. It is now critical to accelerate implementation of that agenda,” the fund said.

“Broad buy-in will be essential to accomplish the urgent task of reducing macroeconomic imbalances, shore up stability and support the job-creating growth that is required to activate the substantial economic potential of Tunisia,” it added.

The fund has previously indicated that any reforms included in the agreement would need the support of the powerful UGTT labour union, which has proven able to paralyse the economy with strikes.

However, the union has so far rejected the reforms proposed by the government and last month it held a strike of public sector workers over Saied’s decision not to involve it in economic policy making.

(Reporting by Angus McDowall; Editing by Mark Porter and Nick Zieminski)