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Tunisia to accelerate reforms as IMF freezes loan

Tunisia to accelerate reforms as IMF freezes loan

Tunisia

Tunisia plans to sell stakes in three state-owned banks this year and cup up to 10,000 jobs in the public sector as part of reforms requested by the International Monetary Fund (IMF), as the body has frozen the second tranche of loan, the finance minister said.

Six years after its 2011 pro-democracy uprisings, the North African country is still struggling to make economic progress.
Last June, the IMF released the first tranche of loan of $320 million.

Country’s finance minister, Lamia Zribi told Reuters that the second payment had not been made.

The IMF froze a second tranche worth $350 million scheduled last December because of lack of progress in reforms, including public sector wage bill, the public finances and state banks.

“The IMF froze a second tranche worth $350 million scheduled last December because of lack of progress in reforms, including public sector wage bill, the public finances and state banks,” he said.

He said IMF delegation had been expected in Tunisia next month to discuss reforms and the third tranche of the loan, but the team will not come if they did not see reform progress.

He reiterated that the government was ready to launch a new push on the reforms package in the public sector, the banking sector, state companies and taxes.
According to him, the government would immediately begin plans for a voluntary layoff program for state employees by encouraging early retirement, aiming to cut at least 10,000 public sector jobs in 2017 through the program.

Tunisia has been backed by foreign partners and multilateral lenders since 2011 who are keen to see a new democracy succeed, but economic reforms have lagged behind political changes.

The IMF is urgently demanding the reforms of three state banks, Societe Tunisienne de Bank (STB), Bank National (BNA) and Bank Habitat (BH).

In 2015 the Tunisian government injected 800 million Tunisian dinars ($350 million) to recapitalize STB, BNA and BH, but the banks still struggle with large deficits.

“We are studying options, including the fusion of the three into one bank, but this actually does not seem realistic. The other option is to sell stakes to strategic partners,” the minister said.

The government also intends to sell some companies confiscated from former President Zine El Abidine Ben Ali’s family in telecommunications, media and service sectors.

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