As fog hangs over the future of the Tunisian economy, after negotiations with the International Monetary Fund stalled over a $19 billion loan, economic analysts do not rule out Tunisia resorting to the “Paris Club”, which includes the largest donor countries in the world.
The hard choice
Tunisian economic analyst Hassan Bali expects his country to resort to the most difficult option, in order to find a solution to the worsening economic crisis in the country, after negotiations with the IMF faltered.
According to “Bali” in his interview with “Sky News Arabia”, his country does not have many options left to solve the economic crisis, and the most prominent of these options is that it is forced to resort to the “Paris Club” to contribute to providing solutions.
Qais Saeed announces his rejection of the dictates and conditions of the International Monetary Fund
Paris Club
- Formed in the fifties of the last century, it includes 20 of the largest economies in the world, including Canada, France, Germany, Italy, South Korea, Japan, Russia, Britain, the United States, and Israel.
- It provides financial and monetary services to troubled countries, such as reducing the interest rate and scheduling debts instead of declaring bankruptcy, and the state is indebted to its members, and is subject to questioning and review at its hands on how to dispose of the funds owed to it.
- Its procedures are similar to the International Monetary Fund, with differences in terms and interest rates.
- Usually, countries in crisis do not prefer to resort to it unless their efforts to reach an understanding with the IMF fail.
Contradictory positions
- In the clearest refusal of the Tunisian president, Kais Saied, to conclude an agreement with the IMF, he said in statements, Thursday, that he rejects “dictations,” stressing that he will not risk threatening civil peace in the country, in reference to the unrest that may cause a sharp reduction in subsidies in implementation of the conditions. criticism.
- Saeed’s statements contradicted the position of members of the government who said that there was no alternative to an agreement with the fund.
- Economy Minister Samir Said reiterated that Tunisia has no choice but to agree with the IMF and that it has no Plan B.
- According to the 2023 budget, Tunisia plans to cut support expenditures by 26.4 percent to 8.8 billion dinars ($2.89 billion).
- But so far, the government has not raised fuel prices this year, contrary to previous plans, apparently seeking to avoid public anger as inflation reached 10.3 percent, the highest level in four decades.
- Saied blamed Tunisia’s economic woes on corruption over the past years, and rejected what he saw as foreign interference.
The scale of the crisis
- According to “Bali”, after the failure of negotiations with the IMF, the economic crisis in Tunisia is heading towards exacerbation.
- The country suffers from high and increasing inflation, and the inflation rate rose last March to 10.3%, and free food rose to 18.5%, and in general the inflation rate increased by 0.7% in March from February.
- According to the Tunisian analyst, these figures “show the failure of government policies to manage the economic crisis, and they must search for real solutions to confront this crisis in a radical and sustainable manner,” as he put it.
- It is noteworthy that a government report monitored that the state’s excessive borrowing policy from the local banking and financial system caused an increase in inflation due to the use of paper money in large quantities to finance the deficit in the general budget.
Economist: Sudden postponement of the IMF loan to Tunisia
What are the solutions?
Bali suggests that the government begin a package of measures to quickly rectify the situation, including stimulating national and foreign investments with measures that enhance confidence in the Tunisian economy, along with taking into account social affairs, improving the living conditions of citizens, and combating corruption.