Tunisia has decided to cut off all contact with the International Monetary Fund (IMF) in light of President Kais Saied’s claims that the IMF is overreaching and meddling in the nation’s economic sovereignty.
The relationship between Tunisia and the IMF has been fraught with challenges, especially in recent years. In 2022, both parties reached a preliminary agreement for a 48-month Extended Fund Facility (EFF) amounting to approximately $1.9 billion, aimed at supporting Tunisia’s economic policies and reforms. However, the deal required approval from the IMF’s Executive Board, which was scheduled to discuss Tunisia’s program request in December of that year.
Despite these efforts, President Saied expressed strong opposition to certain IMF conditions, particularly those involving subsidy cuts and the privatization of state-owned enterprises. He argued that such measures could lead to social unrest and further economic hardship for the Tunisian populace. In October 2023, Saied dismissed the economy minister over statements regarding the IMF, emphasizing his stance against what he described as the IMF’s “dictates.”
Tunisia’s economic situation remains precarious. In October 2024, the government announced plans to increase taxes on companies and middle to high-income earners in the upcoming fiscal year. Additionally, Tunisia aims to nearly double its domestic debt to $7.08 billion, while significantly reducing external loans. These measures reflect the country’s ongoing struggle to secure external financing, especially after the stalled IMF loan negotiations in 2022.
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The decision to cut ties with the IMF raises critical questions about Tunisia’s economic future. Without the financial support and guidance of the IMF, Tunisia faces the daunting task of addressing high inflation, unemployment, and mounting public debt independently.
Furthermore, Tunisia’s move may influence its relationships with other international financial institutions and potential investors. The international community will be closely monitoring how Tunisia navigates its economic challenges in the absence of IMF collaboration.
The outcome of this situation could serve as a precedent for other nations grappling with similar dilemmas between economic reforms imposed by external entities and the preservation of national economic autonomy.
