The Saudis are once again making their contribution to keeping Tunisia afloat. The two countries signed an agreement on Sunday providing for the Islamic fund ITFC, based in the Gulf monarchy, to provide $1.2 billion in loan aid to Tunis.
The credit, paid over three years, will be used to finance imports of raw materials, in particular petroleum products, intended for Tunisian public companies, said the Tunisian Ministry of the Economy, without further details on the conditions of the loan. .
Tunisia has around a hundred public companies controlled by the State and most of them loss-making. These centralize the purchase of subsidized products such as fuel, cereals, sugar, etc. But due to lack of liquidity, the Tunisian state is struggling to import these basic food products, which are regularly in short supply. Among the state companies is also the former industrial flagship, the Gafsa Phosphate Company (CPG).
Half as much external funding as expected
This new loan confirms the path taken since last year by the Tunisia of Kaïs Saïed: in great financial difficulty, it prefers to seek support from other partner countries rather than bring negotiations to fruition with a view to a loan of 2 billion dollars from the International Monetary Fund (IMF) – which would indirectly unlock European aid.
The president, who has imposed an authoritarian and populist turn on his country since 2021, rejected the painful reforms demanded by the Washington institution, which he describes as a “diktat”. And it seems unlikely that his speech will change a few months before the presidential election – scheduled for the fall.
Already last year, Riyadh had granted $500 million in loans and donations to Tunisia. The African Export-Import Bank Afreximbank contributed the same amount (with an interest rate of 10%) and the African Development Bank $600 million. Algeria has also put its hand into its wallet to support its neighbor with 300 million dollars per year.
In total, Tunisia has secured $2.5 billion in external financing for 2024, according to the Fitch rating agency. Or half as much as what is planned in its budget this year. Unable to finance itself on the markets, Tunis also called on its Central Bank to finance its deficit through an amendment voted at the beginning of February.
Default fades away
With sluggish growth, persistent inflation, a high unemployment rate, a budget deficit expected around 6.5% of GDP this year and a debt of almost 80% of GDP, Tunisia continues to worry. The only good news: its current account deficit has been significantly reduced. It should not exceed 4% last year, compared to 8.6% in 2022, according to economists.