Tunisia. Central bank governor warns of a very difficult year
Tunisian Central Bank Governor Marwan Al-Abbasi said 2023 will be a “difficult” year with weak growth and high inflation if a quick loan agreement is reached with the International Monetary Fund. did not reach.
Al-Abbasi said during a press conference on Wednesday that “if an agreement with the International Monetary Fund is not reached in 2023, the situation for the country will be very difficult.”
Abbasi cited several reasons for the Fund’s delay in final approval, which was originally expected on 19 December, and cited Tunisia’s finance law “which was not ready”.
“Now it’s done, and there’s also a law on very high interest rates,” he said.
There is another law requested by the International Monetary Fund that allows the restructuring of more than a hundred heavily indebted Tunisian state-owned companies, as Al-Abbasi explained, this law has been the subject of a long discussion and will be presented to the Council of Ministers. .
“Once it is approved, we will be able to apply to the board of directors of the International Monetary Fund,” he added, stressing that the sooner this happens, the better.
On the other hand, Abbasi defended the Central Bank’s recent decision to raise the main interest rate to 8% to curb inflation, although it is expected to remain high at 11% in 2023, he said.
And after acknowledging that this decision would “hold back growth”, which is expected to reach 2.1% this year, he emphasized that the Central Bank, which also intends to protect the national currency, does not have many other tools.
He said he expected significant price increases for some commodities over the next three to four years, with the gradual removal of subsidies on basic products, especially energy derivatives.
And Tunisia, which has more than 80% of its gross domestic product in debt, reached an initial agreement with the International Monetary Fund in mid-October for a new loan of about $2 billion to help it cope with worsening economic difficulties, but a loan that was supposed to be paid in installments from December 2022, has not yet been approved by the IMF Board of Directors.