Tunisia’s economy to shrink by up to 4.3 per cent

Published on : Friday, April 17, 2020

 

An official document showed that  Tunisia’s vital tourism sector could lose $1.4 billion and 400,000 jobs this year due to the coronavirus pandemic.

The country seeks a loan guarantee from bilateral partners to issue sovereign bonds this year.

Tunisia’s central bank governor and finance minister said that the country’s economy would shrink by up to 4.3 percent in a letter to the International Monetary Fund which will be the steepest drop since independence in 1956.

To counter the effects of coronavirus IMF has approved on Friday a $745 million loan to Tunisia stating that a new funding program with Tunisia could start in the second half of this year however, the size of the new program remains unknown.

Last month the North African country has confirmed 747 cases of the virus and 34 deaths. A lockdown was also imposed which would last until at least April 19.

The tourism sector is hammered by the outbreak which represents 10 percent of the GDP and is a key foreign currency.

The central bank governor and finance minister wrote in their letter that they were working with the partner governments on a potential guarantee for future sovereign bond issuance in the current difficult international context.

The fiscal deficit in Tunisia would rise to 4.3 per cent in GDP this year as compared with 2.8 percent originally expected. This is due to the need for extraordinary expenditure over the crisis.

Tunisia would rise 4.3 percent of GDP this year as compared with 2.8 percent originally expected.

Tunisia intends to issue bond worth up to €800 million ($877 million) but officials have not given any details or date for the issue.

Tunisia is also seeking a loan guarantee from G7 country.

Tunisia would need to seek alternative financing that could involve a syndicated loan from international banks if such a guarantee were not forthcoming.

It pledged to contain its public wage bill, reform public companies and reduce subsidies for electricity and natural gas.


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