02 April 2013 2:26 pm | | 0

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Finance Minister Elyes Fakhfakh. Image courtesy of his official Facebook page.

A week-long meeting between Tunisian officials and personnel from the International Monetary Fund (IMF) over a controversial loan agreement will begin April 8 in Tunisia.

“We are in agreement on about 95 percent of the program,” Finance Minister Elyes Fakhfakh said in an interview with Bloomberg. He stated that the deal, valued at $1.78 billion, could be finalized by late April or early May.

The IMF loan accord would require Tunisia to commit to a set of structural economic reforms. Fakhfakh told Bloomberg that reforms have already been underway since the revolution, and that the IMF requirements are “very small” in comparison. He said it is important to gain a guarantee from the IMF to shield Tunisia against financial instability within the country and the economic crisis in Europe.

While the government sees the IMF loan as key to advancing development in Tunisia, there has been considerable criticism of the measure within the country.

“Taking a loan might sound like the simple move,” wrote Mariem Ben Adid of the Arab Governance Insititue on the Nawaat website. But the effects of the mandated reforms, she asserted, would be harmful to Tunisia’s economy and living standards. Ben Adid sees the reductions in subsidies, increases in taxes, and higher interest rates requested by the IMF as detrimental to the Tunisian middle class.

Concerns about transparency have also emerged and the government has been accused of negotiating the deal without sharing details with the public.

“Despite the fact that we, as Tunisian citizens, will bear the brunt of these reforms, we will not know the conditions of this loan that will come out of our own pockets until the contract is signed,” Ben Adid wrote.

Former Tunisian Central Bank governor Mustapha Kamel Nabli also criticized the deal last weak in an interview with RTCI, saying that economic reforms should not be the result of external pressures and that the lack of public debate on the loan will have negative effects on its implementation.

Tunisia may also issue $700 million in sukuk, a type of bond crafted in accordance with Islamic restrictions on interest, in late June or early July. Fakhfakh told Reuters that the government was in the final stages of pushing through a law allowing for sukuk.

Tunisia also hopes to arrange a US-backed bond issued for the second straight year, reported Bloomberg.

A follow-up meeting between Tunisian officials and the IMF will occur in the US later this month.

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