Tunisia, the North African country whose January 2011 revolution ended the 23-year rule of Zine al-Abidine Ben Ali and sparked a wave of protests across the Arab world, is in negotiations with Saudi Arabia for US$750m in assistance, Finance Minister Houcine Dimassi said in an interview with Arabian Business.
"We have a loan from Qatar and we are in negotiations still with Saudi Arabia for about US$750m," Dimassi said. "The UAE has given us US$200m - most of it was used for the health sector."
"We are in touch with our brothers in the Gulf and if needed we will seek the assistance of the International Monetary Fund," he said, adding that Tunisia was not seeking the organisation's assistance at the moment.
In April, Qatar gave Tunisia a US$1bn low interest loan, half of which is at an annual interest rate of 2.5 percent and will go to the central bank.
Tunisia is likely to issue US$300m in bonds guaranteed by the US government in July, though the date may change, Dimassi said.
The issuance comes in the wake of an accord in Washington in April, where the US government agreed to provide a loan guarantee to enable the Tunisian government to access market financing, reducing the Tunisian government’s borrowing costs at a time when market access has become more expensive for many emerging market countries.
The money will help Tunisia tackle its fiscal deficit, estimated this year at 6.6 percent of gross domestic product, Dimassi said. The country’s economy, saddled with 19 percent unemployment, grew 4.8 percent in the first three months of the year compared to the same period in 2011, he said.
Tunisia's economy contracted 1.8 percent in 2011 in the wake of political instability. Agriculture, which accounts for 11 percent of GDP, the manufacturing industry at 16.7 percent, services 45.5 percent, and tourism for 6.3 percent, were all impacted by the turmoil.
Tourism revenue fell 46 percent and foreign investment declined by 17.8 percent, according to the African Development Bank. During the turmoil as much as US$8bn, or about 4 percent of GDP was lost.
"Macroeconomic stability hinges on political stability, institutional transparency, an improved business climate and a sustained public infrastructure investment policy," AfDB said in a report on the North African country.
GDP growth is projected at 3.5 percent this year, Dimassi said. The International Monetary Fund forecasts a lower expansion rate of 2.2 percent.
"It’s logical, as we’re not isolated as to what’s going on in the world and in Europe in particular. We expect some areas to be impacted more than others," Dimassi said, when asked if he had concerns about the ability of his country’s economy to rebound in the wake of the debt crisis in Europe,
Standard & Poor's on May 23 cut Tunisia’s sovereign credit rating to junk, downgrading it to BB, citing weaker-than-expected economic, fiscal and external debt indicators despite overall political stability.
"Despite overall stability and consensus since the removal of President Ben Ali in early 2011, we believe pronounced medium-term policy uncertainties will persist, at least until Tunisia adopts a new constitution and elects a government. We do not expect this before mid-2013," S&P said.
Tunisia's transitional government - in office since December 2011 - is unlikely to "be able to take proactive corrective measures against a weakening economic and financial backdrop that would be consistent with an investment-grade rating," the agency said, adding however its stable outlook on Tunisia’s long-term ratings indicates a belief that "the political transition should be smooth and the country should withstand potentially considerable external shocks emanating from Europe”.
By / Arabian Business