IMF Executive Board Approves US$2.9 billion Extended Arrangement under the Extended Fund Facility for Tunisia | WPN World People News

The Executive Board of the International Monetary Fund (IMF) on 20 May approved a 48-month extended arrangement under the Extended Fund Facility (EFF) with Tunisia for an amount equivalent to SDR 2.04 billion (about US$2.9 billion, or 375 percent of Tunisia’s quota) to support the country’s economic and financial reform program detailed in the authorities’ economic vision. This program aims at promoting stronger and more inclusive growth by consolidating macroeconomic stability, reforming public institutions—including the civil service, facilitating financial intermediation, and improving the business climate. Following the Board’s decision, an amount equivalent to SDR 227.29 million (about US$319.5 million) is available for immediate disbursement; the remaining amount will be phased in over the duration of the program, subject to eight program reviews.

Following the Executive Board discussion on Tunisia, Mr. Mitsuhiro Furusawa, Deputy Managing Director, and Acting Chair, said:

“Tunisia’s economy has shown resilience but continues to face important fiscal, external, structural, and social challenges. Macroeconomic stability has been preserved and important reforms have been initiated, including with the support of the recently expired Fund-supported program.

“The authorities have developed a comprehensive and new economic program—to be supported by a four-year Extended Fund Facility—to address remaining vulnerabilities. The program aims at consolidating macroeconomic stability and promoting more inclusive growth. Strong commitment to sound policies, early and decisive action on key structural reforms, and consensus-building and communication efforts, particularly on socially difficult reforms, are crucial to create jobs and yield the largest gains for Tunisia’s population.

“A prudent fiscal policy that puts public debt on a downward path will help ease financing constraints, reduce external imbalances, and ensure sustainability. A comprehensive civil service reform will improve public service delivery and increase fiscal space for priority investment and well-targeted social spending. A more progressive and efficient tax system will broaden the tax base and improve equity. Fiscal risks should continue to be monitored; and governance efforts, accelerated.

“Enhanced central bank independence will strengthen the effectiveness of monetary policy, while greater exchange rate flexibility will strengthen reserve buffers and facilitate external adjustment.

“The adoption of critical banking sector legislation is welcome. Further action is needed to restructure public banks and strengthen the banking resolution and supervision frameworks. Developing credit bureaus and relaxing caps on lending rates will increase access to finance.

“Efforts to streamline existing business procedures and enhance market access through a new investment code and the implementation of the competition law and the law on public-private partnerships are essential to promote private-sector development and create jobs.”

Source: International Monetary Fund