“Tunisia’s leaders trumpeted the news of a recent staff-level agreement with the International Monetary Fund (IMF) on a $1.9 billion rescue package aimed at addressing the country’s deepening financial crisis. After more than a year of protracted talks, the deal — which still needs to go through an IMF executive board vote in December — is being presented by Tunisian President Kais Said as a vindication of his leadership. However, the absence of consensus around the reforms underpinning the agreement ultimately could torpedo the agreement and, potentially, Said’s presidency.

“The deal in itself is unlikely to be the panacea to Tunisia’s many economic problems, namely the declining standard of living, food and fuel shortages, and skyrocketing inflation, all of which have been exacerbated by COVID, Russia’s war with Ukraine, and Tunisia’s own political volatility. Tunisia already owes the IMF $2.1 billion; its debt burden is currently at $40 billion and its debt-to-GDP has risen from 68.97 percent pre-pandemic to 87.9 percent this year. If it continues at this pace, debt-to-GDP could hit 100 percent by 2025.

“The government hopes that the new IMF deal will unlock bilateral loan agreements that will jumpstart economic recovery and lead to growth, though this will all depend on whether Tunisian leaders can convince international partners to come to the country’s aid. What is less certain is the ability of these leaders to deliver the reform package embedded in the deal, including more sustainable job creation, greater tax equity, and cutting rampant public spending and price subsidies. Despite the integration of measures to expand social safety to disadvantaged and marginalized populations, fear that these actions will aggravate unemployment and inflation at a time of intense economic misery predominate. And even with all the will in the world, the deep and entrenched government bureaucracy that is riddled by administrative corruption may be unable to deliver on this ambitious agenda. …”

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