From Aziz Al Yaqoubi
JEDDAH, Saudi Arabia (Reuters) – Tunisia expects to reach an agreement with the International Monetary Fund in the coming weeks on a loan of between $2 billion and $4 billion over three years, the governor of the Central Bank of Tunisia said on Sunday.
Tunisia, which is suffering its worst financial crisis, is seeking a loan from the International Monetary Fund to save public finances from collapsing.
“The volume is still under negotiation and I think it will be between $2 billion and $4 billion and we hope to reach a staff-level agreement in the coming weeks,” Marwan Abbasi told Reuters.
The government and the powerful Tunisian General Labor Union last week signed an agreement to raise public sector wages by 5%, a move that could ease social tensions. But they did not announce any further agreement on the reforms needed to rescue the International Monetary Fund.
Abbasi said the wage deal was an important step for negotiations with the International Monetary Fund and would give a clear view of the weight of wages in GDP in the coming years.
“It will give us a clear view of the mass of wages that is expected to decrease in the coming years,” he added.
Credit rating agency Fitch said on Friday that the wage agreement in Tunisia increases the likelihood of a deal with the International Monetary Fund.
Abbasi said the potential deal would open doors to bilateral financing, including with Japan and the Gulf states.
“We have advanced talks with Saudi Arabia regarding bilateral financing,” he added.
The International Monetary Fund has indicated that it will not go ahead with the rescue plan sought by Tunisia unless the government joins the Tunisian General Labor Union, which says it has more than a million members and that it has previously shut down the economy in strikes.
Tunisia is struggling to revive its public finances with growing discontent with inflation that has reached nearly 9% and many food shortages in stores because the country cannot afford some imports.