the agreement between the UGTT and the government has freed up negotiations with the IMF

Boudriga: The agreement between the UGTT and the government has unblocked negotiations with the IMF

Economic expert Abdelkader Boudriga returned on Tuesday, October 18, 2022, to the preliminary agreement between Tunisia and the International Monetary Fund (IMF), according to which the country should obtain the sum of 1.9 billion dollars over four years.

Guest of Hatem Ben Amara on the Jawhara FM morning show, he explained that this type of arrangement was intended for countries that suffer from long-term structural problems and whose solutions cannot be implemented quickly. The repayment of this loan is over ten years, which makes it a better agreement than the one concluded with the IMF in 2016, the expert believes.

Contrary to some of his colleagues who claim that the final decision of the IMF’s Board of Directors would only be made after the results of the parliamentary elections and that this could mean a no to the conclusion of the agreement, the expert explained that the IMF’s Executive Board followed its own agenda, and that the next meeting would naturally be held next month. He recalled that historically the IMF’s board had never contradicted its experts.

Regarding the program presented by the Tunisian government, Boudriga added that the approaches to negotiations with the IMF had changed since 2008. The latter no longer sets specific conditions for providing its assistance, but rather lets governments offer it a program of reforms they can implement , according to the expert.

He pointed out in the same context that the agreement between the social parties – the Trade Union Center – and the government was the most important factor that pushed forward the conclusion of this preliminary agreement between Tunisia and the IMF.

He also mentioned the points agreed upon by the IMF and the Tunisian government, noting that the financial backer mentioned them in his press release. According to the IMF, the Tunisian authorities’ reform program should make it possible to:

  • Strengthen tax justice by taking steps to gradually integrate the informal sector into the tax system and by broadening the tax base to ensure a fair contribution from all businesses;
  • Control expenses and create fiscal space for social assistance. The authorities have already taken steps to bring public wage expenditure under control and have begun to phase out widespread and costly price subsidies by making regular adjustments to bring domestic prices in line with world market prices, while providing adequately targeted protections to vulnerable categories of the population (especially through social transfers);
  • Strengthen the social safety net by increasing cash transfers and expanding existing social safety nets to compensate vulnerable households for the impact of price increases;
  • Participate in a comprehensive reform program for public enterprises, starting with the adoption of a new law regulating them;
  • Accelerating structural reforms aimed at increasing competition and creating a transparent and fair environment for investors by streamlining and simplifying investment incentives;
  • Strengthen governance and transparency in the public sector, in particular through a comprehensive diagnosis of governance with a view to establishing a roadmap for reforms;
  • Promote adaptation and build resilience to climate change by encouraging investment in renewable energy as well as through land and water management (including wastewater) and taking initiatives to protect the Tunisian coast and the agricultural, health and tourism sectors;
  • Preserve Tunisians’ purchasing power in the face of high and accelerating inflation. To strengthen macroeconomic stability, Tunisia’s central bank has begun to tighten its monetary policy.

Boudriga also stressed that an austerity policy could not be the solution to the economic problems in Tunisia, warning against the deterioration of the production machine. ” Austerity policy can create fiscal space in the short term, but cannot be the solution in this period of economic stagnation “.

The IMF announced on Saturday that its services and the Tunisian authorities had reached out a service level agreement to support Tunisia’s economic policies through an Extended Fund Facility (EFF) scheme for 48 months and around 1.9 billion “, stating that” the new program (…) aims to restore macroeconomic stability, strengthen social safety nets and fiscal fairness, and accelerate reforms that foster an environment conducive to inclusive growth and sustainable job creation “.


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