Tunisia expects deal on IMF loan in weeks, cbank governor says

By Aziz El Yaakoubi

JEDDAH, Saudi Arabia (Reuters) -Tunisia expects to reach a deal with the International Monetary Fund in coming weeks on a loan of between $2 billion and $4 billion over three years, the central bank governor said on Sunday.

Tunisia, which is suffering its worst financial crisis, is seeking to secure an IMF loan to save public finances from collapse.

“The size is still under negotiation and I think it will be between $2 billion and $4 billion, we hope to reach a staff level deal in coming weeks,” Marouan Abassi told Reuters.

The government and the powerful UGTT union last week signed a deal to boost public sector wages by 5%, a step that may ease social tensions. But they did not announce any further agreement on reforms needed for an IMF bailout.

Abassi said the wage deal was an important step for negotiations with the IMF and will give a clear view of wages’ weight in GDP in coming years.

“It will give us a clear vision about the wage mass that is expected to decline in the coming years,” he added.

Fitch Ratings said on Friday that Tunisia’s wage agreement raises the likelihood of an IMF deal.

Abassi said the possible deal will open doors for bilateral financing, including with Japan and Gulf countries.

“We have advanced talks with Saudi Arabia about bilateral financing,” he added.

The IMF has signalled it will not move forward with a bailout sought by Tunis unless the government brings on board the UGTT, which says it has more than a million members and has previously shut down the economy in strikes.

Tunisia is struggling to revive its public finances as discontent grows over inflation running at nearly 9% and a shortage of many food items in stores because the country cannot afford to pay for some imports.

(Reporting by Aziz El Yaakoubi in Jeddah, writing by Tarek Amara in Tunis, Editing by Emelia Sithole-Matarise and Andrew Cawthorne)