The International Monetary Fund (IMF) is willing to provide much-needed financing to help boost Tunisia’s slow economic recovery, according to First Deputy Manager of the IMF David Lipton.
Lipton offered support yesterday in Tunis at an economic conference on the regional economic outlook, jointly hosted by the IMF and the Tunisian Central Bank (BCT), that painted a gloomy picture of the prospects for a robust recovery in Tunisia and other post-revolution economies.
The IMF adjusted its global projection for growth in 2012 last month to 3.3%, down from 3.5% in April, in view of the Eurozone crisis and the U.S. “fiscal cliff.” In the Middle East and North Africa (MENA) region, where an uptick in oil exports from Libya lifted growth slightly, the IMF also adjusted its projections for growth down from 5.3% to 4.2% in 2012.
“If the government sees a need, the IMF stands ready to provide financial assistance,” Lipton said, speaking before Director of the BCT Chedly Ayari and Tunisian business leaders.
The IMF forecasts that the MENA region will require 33 billion Euros ($42 billion) in international financing in 2013, as exports suffer and the number of tourists continues to lag behind pre-revolution figures. Tunisia, where government reserves have fallen by 24% since 2010, will require more than 5 billion euros in international financing in 2012 and in 2013, the IMF projects.
“The odds appear somewhat stacked against Arab countries in transition,” Lipton said. “In addition to the slowing world economy and the ongoing uncertainties in Europe, higher food and fuel prices and the conflict in Syria… are jeopardizing the fragile gains that have been made.”
MENA economies continue to face high unemployment, large budget deficits, and limited flexibility in the private sector, said Amine Mati, head of the IMF mission to Tunisia.
In Tunisia, where the number of tourists has fallen by 13.5% since 2010, the unemployment rate hovers around 18%, he said.
The region must reform regulation of the private sector, improve education, and develop greater access to financing to sustain the recovery, Mati said.
“This is an opportune moment to fix the economies in transition,” Mati said. “Rapid political action and macroeconomic reform will boost the recovery, economic competitiveness, and job creation.”
An IMF delegation is currently in Egypt negotiating a $4.8 billion loan requested by the local government.
In Tunisia, the IMF has focused on providing authorities with technical advice, Lipton said.
A loan from the IMF, if requested, would not target a particular sector but would rather aim to “rebalance macroeconomic policy and restore stability,” Lipton said.
Lipton called on the international community to support the region’s recovery through trade and investment.
“We at the IMF are willing to do what we can to help you and to encourage the rest of the international community to join in that effort,” Lipton said.