TUNIS, July 2 (Reuters) - Tunisia's government cut fuel subsidies on Sunday, raising petrol prices by 6.7 percent in an effort to trim its budget deficit, one of the key reforms asked for by the International Monetary Fund.

Tunisia expects its budget deficit for 2017 to widen to 5.9 percent from a previously expected 5.4 percent because of higher fuel costs and the fall in the local dinar value.

Authorities on Sunday lifted the price of lead-free petrol to 1.750 dinars ($0.726) a litre from 1.650 dinar. The last increase in fuel prices was in 2014.

The IMF released last month a $320-million delayed tranche of Tunisia's IMF loan after the government agreed to speed up economic reforms.

($1 = 2.4085 Tunisian dinars)

(Reporting By Tarek Amara; Editing by Elaine Hardcastle) ((tarek.amara@thomsonreuters.com;))