Tunis - The International Monetary Fund (IMF) Executive Board and the Tunisian authorities will consider at the end of September a staff-level agreement on the Sixth Review under the Stand-By-Arrangement.
"Upon completion of this review, SDR 214.87 (about USD 303.8 million) will be made available to Tunisia," Mr. Amine Mati, IMF Mission Chief for Tunisia said in Washington.
According to an IMF statement issued Wednesday, "an IMF mission concluded the 2015 Article IV discussions with Tunisia and announced a Staff-Level Agreement with the Tunisian authorities on the Sixth Review under the Stand-By Arrangement.
"This agreement is subject to approval by IMF management and the Executive Board, which is tentatively scheduled to consider the review in September," said the same source.
On another hand, "the mission welcomes the authorities' continued commitment to implementing their national economic programme, following the successful conclusion of their political transition and looks forward to continuing the close co-operation to achieve the programme objectives of macro-economic stability and stronger and more inclusive growth."
"In recent years, Tunisia's economy has been resilient in a period marked by a difficult international economic environment, spillovers from regional conflicts, increased security risks and high social tensions," the IMF statement recalls.
"However, after reaching 2.4 percent in 2014,; growth momentum has waned. Growth is projected to slow to 1 percent for 2015 as the repercussions of the tragic Bardo and Sousse attacks and persistent social tensions- as shown by work stoppages and strikes- dampened the benefits from the post-transition confidence boost, lower global oil prices and the eurozone recovery."
The IMF also expects external imbalances to remain high with the current account deficit improving marginally to 8.5 percent of GDP in 2015 while foreign exchange reserves remained at an appropriate level of 4-months import coverage, which is necessary to strengthen external buffers and reduce vulnerabilities.
According to the IMF, inflationary pressures are expected to remain contained, helped by lower energy and food prices and a prudent monetary policy.
Concerning the overall performance under the Fund-supported programme, it has been satisfactory, according to the financial institutions, recalling that all the end-March 2015 quantitative performance criteria have been met except for the indicator floor on social spending.
Progress on structural reforms has been slow, but picked up recently on the banking sector front.
The IMF mission also welcomed the modest loosening of the fiscal stance in 2015 to accommodate the short-term economic fallout of the recent economic slowdown, including through increased security expenditures and transfers to SMEs.
On another hand, it noted the growing public sector wage bill and called for the need to contain it to make room for priority and productive capital spending, which had reached record lows.
"The recent reduction in energy subsidies, resulting from the decline in global oil prices, is a welcome development," the IMF mission said, noting that "an automatic fuel price
formula should be designed urgently to allow for a much needed decline in domestic retail fuel prices which are currently above international level for some products. «It will also be important for the government to move quickly in adopting the tax reform whose design followed a long process of consensus building the national tax consultations, and aims at promoter greater transparency, efficiency and equity," said the same source.
"A prudent monetary stance would continue containing inflationary pressures while grater exchange rate flexibility including through continuing to limit foreign exchange interventions to smooth large fluctuations- will contribute to reducing external imbalances and strengthening reserve buffers."
According to the IMF, "the implementation of the authorities' broad reform agenda is progressing. However, at 15.2 percent unemployment, there is an urgent need to push ahead with structural reforms to boost job creation and help meet the aspirations of the Tunisian population for a more inclusive society."
Regarding to the banking sector, the IMF recommends the adoption of a new banking law and further strengthening the supervisory and regulatory framework that will be "needed to construct a modern banking sector and facilitate financial sector intermediation."
It added that "the creation of a level playing field for investors will require adopting and implementing key legislation, such as bankruptcy and competition laws" Advances in strengthening the social safety net by better identifying and targeting the vulnerable population is also welcome."
The IMF mission visited Tunis in June and July 2015 to carry out discussions with the Tunisian authorities on the Article IV consultation and the sixth review of the economic and financial programme supported by the Stand-By-Arrangement.
© Tunis-Afrique Presse 2015
