IMF Executive Board Approves a 24-month US$1.74 Billion Stand-By Arrangement with Tunisia

TUNIS, Tunisia, June 10, 2013/African Press Organization (APO)/ The Executive Board of the International Monetary Fund (IMF) today approved a 24-month Stand-By Arrangement for an amount equivalent to SDR 1.146 billion ( US$1.74 billion) with Tunisia to support the country’s economic reform program during 2013-2015 aimed at strengthening fiscal and external buffers, and fostering higher inclusive growth. As a result of the Board’s decision, an amount equivalent to SDR 98.8 million (about US$150.2 million) is available for immediate disbursement, and the remaining amount will be phased in over the duration of the program, subject to eight program reviews. The Stand-By Arrangement entails regular access to IMF resources, amounting to 400 percent of Tunisia’s quota.

Following the Executive Board discussion on Tunisia, Ms. Nemat Shafik, Deputy Managing Director, and Acting Chair, said:

“Tunisia has embarked on a moderate economic recovery while facing a challenging international economic environment and pursuing a political transition. A fragile banking sector, pressing social demands, widespread regional disparities, and high unemployment are key challenges, together with widening external and fiscal deficits.

“The Tunisian authorities have developed a comprehensive economic program to address these challenges. The program aims to strengthen fiscal and external buffers, while laying the building blocks for stronger growth and protecting the most vulnerable.

“The authorities have already taken important measures to reduce vulnerabilities, notably through tighter monetary policy, greater exchange rate flexibility, and reduced subsidy cost. Planned fiscal reforms focus on increasing fiscal space for critical investment and social spending through wage restraint and subsidy reform, while social safety nets will be strengthened. A comprehensive reform of tax policy and revenue administration will help broaden the tax base and improve equity.

“The authorities are taking decisive action to address banking system fragilities. Priorities in this area are the audit of public banks, strengthening banking supervision, and aligning prudential norms with international standards. Efforts will continue to improve data quality and develop a bank resolution mechanism.

“Structural reforms will be accelerated to support high and inclusive growth, boost employment, and reduce regional disparities. The authorities are committed to streamlining fiscal incentives and regulatory barriers, including through a new investment code and corporate tax reform, as well as a reduction in red tape.

“The authorities’ program—supported by a two-year Stand-by arrangement—will help strengthen investor confidence and the resilience of the economy. With full implementation of the program, Tunisia will be in a better position to respond to future shocks and meet the pressing needs of its population.”


Recent Developments

Tunisia faced economic difficulties and a series of external shocks following the January 2011 revolution. Due to a challenging international economic environment, as well as regional and domestic tensions, real GDP contracted by 2 percent in 2011, foreign direct investment (FDI) and tourism declined by more than 30 percent year-on-year, and unemployment rose to record levels. However, after the sharp economic decline, the Tunisian

economy began a moderate recovery in 2012. The deteriorating current account deficit—caused partly by falling demand from Europe—has been financed by sustained donor financing, strengthened FDI and market access, which helped increase reserves (but to a level still below 2010). Fiscal space has been reduced to meet pressing social and investment needs, although public debt remains at sustainable levels. A fragile banking sector, widespread social and economic disparities, and high youth unemployment are key challenges. Addressing these challenges in the midst of a political transition remains demanding.

Program Summary

The authorities initiated a medium-term economic program with the overriding objective of stabilizing the economy while laying foundations to support growth and protect the vulnerable. The program combines a package of strong policy measures and structural reforms, coupled with external financing support. Together these are expected to reduce the vulnerabilities arising from the difficult international economic environment and the ongoing political transition, and to provide the foundation for a return of investor confidence.

Key elements of the Fund-supported program are to:

Strengthen fiscal and external buffers. Key measures include: (i) an appropriate fiscal policy that creates space for one-off costs (such as banking recapitalization) and investment spending while avoiding crowding out private-sector credit; (ii) a prudent monetary policy aimed at containing inflation; and (iii) greater exchange rate flexibility to preserve reserves in the face of important exogenous shocks.

Lay the building blocks for growth by first addressing critical vulnerabilities in the banking sector; second, engaging in a medium-term fiscal consolidation that allows for a better composition of expenditures—including sustained public investments; and third, implementing an ambitious structural reform agenda that helps to rebuild Tunisia’s economic model by promoting private-sector development, lowering regional disparities, and reducing pervasive state intervention.

Protect the most vulnerable by strengthening social assistance mechanisms and undertaking a systematic assessment of the social impact of the envisaged reforms. These measures, in addition to the improved composition of public expenditures, will contribute to reducing income disparities.


Tunisia: Selected Economic Indicators, 2009-14

Population: 10.7 million (2012)

Per capita GDP: US$4232 (2012)

Quota: SDR 286.5 million

Poverty rate: 12 percent (2010)


Key export market: France, Italy

Literacy rate: 78 percent (2011)


Main exports: textiles, electronic and mechanical goods, energy, tourism


Prel.    Proj.

2009    2010    2011    2012    2013    2014

(Percent Change, unless otherwise indicated)


Production and income

Real GDP

3.1    2.8    -1.9    3.6    4.0    4.5

GDP deflator

3.3    4.7    5.1    5.3    5.6    4.4

Gross national savings (percent of GDP)

22.1    21.8    16.5    17.3    17.3    19.0

Gross investment (percent of GDP)

24.9    26.6    24.1    25.4    24.7    25.0


Unemployment rate (end of period)

13.3    13.0    18.9    16.7    …    …


Consumer price index (CPI), average

3.5    4.4    3.5    5.6    6.0    4.7

Consumer price index (CPI), end of period

4.0    4.1    4.2    5.9    5.3    5.0

Central government finances (percent of GDP)

Revenue (excl. grants)

23.1    23.3    24.2    23.1    23.8    24.0

Expenditure and net lending

25.8    23.9    27.7    28.5    31.1    30.3

Fiscal balance (excl. grants)

-2.7    -0.6    -3.5    -5.4    -7.3    -6.4

Structural fiscal balance 1/

-2.3    -1.1    -2.9    -4.7    -5.0    -3.8

Total government debt (foreign and domestic)

42.8    40.4    44.0    44.0    45.3    49.5

Money and credit

Broad money (M3 of the financial system)

13.0    12.1    9.1    8.4    12.6    12.0

Credit to the economy

10.3    19.6    13.4    8.7    10.8    11.7

Money market rate (end of period) 2/

4.10    4.12    3.53    3.30    …    …

External sector

Current account balance (percent of GDP, excl. grants)

-2.8    -4.8    -7.3    -8.1    -7.5    -6.0

Exports of goods, f.o.b. (in US$)

-24.8    14.0    8.5    -5.2    6.5    5.6

Imports of goods, f.o.b. (in US$)

-21.9    15.9    7.7    1.5    5.1    3.7

FDI (percent of GDP)

3.3    3.0    0.9    3.9    2.1    2.5

Gross official reserves (US$ billions, end of period)

10.6    9.5    7.5    8.6    9.0    10.8

Gross reserves (months of imports) 3/

5.2    4.4    3.4    3.8    3.8    4.2

External debt (percent of GDP)

49.4    48.3    47.8    51.6    51.1    54.5

Exchange rate


-1.2    -0.5    -1.7    0.0    …    …

Memorandum items:

GDP at current prices (TD millions)

58,883    63,397    65,370    71,332    78,334    85,465


Sources: Tunisian authorities and IMF staff estimates and projections.

1/ Excludes banking recapitalization costs and one-off arrears payments for energy subsidies.


2/ Latest data for current year.

3/ End-of-year reserves over next year’s imports of goods and services.




International Monetary Fund (IMF)

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