Country Report Tunisia March 2011

Economic policy: International aid partners promise support

Visiting Washington at the end of February, Mr Nabli said that Tunisia was in talks with the World Bank, the IMF, the African Development Bank, the EU and Arab funds over future funding options. He said that Tunisia did not need immediate funds, as its international reserves and fiscal position were adequate, for now, to support the economy, but that Tunisia might need financing from its international aid partners in the coming months. He said: "The major risk I see is if in three or four months, the production doesn't come back ... then we may face external pressures and ... fiscal pressures as well." Tunisia will host an international conference at the end of March or in early April to debate its economic plans.

Several of Tunisia's international aid partners have said that they are ready to help. The Arab League has agreed to provide urgent economic assistance through providing funds to the BCT. The African Development Bank has said that it is ready to provide US$500m-1bn in loans to support the budget and help the country address unemployment, regional inequalities and infrastructure development. The EU has provided EUR17m (US$21m) in immediate emergency aid and would provide a further EUR258m by 2013 to "help deliver and underpin ... the democratic transition and support economic and social development". The EU has also said that it aims to complete negotiations before July to award Tunisia "advanced status" in its relations with the EU, which would offer more favourable trade terms. The European Investment Bank (EIB) said that it would provide an extra EUR870m to help to create jobs and improve living standards, especially in the underprivileged interior. Some EUR260m of the total would support the creation of small and medium-sized enterprises (SMEs); EUR140m would fund a new chemical plant at Mdhila; EUR160m would be spent on roadbuilding, especially in the interior; and EUR310m on infrastructure improvements in deprived rural areas. In addition, the EIB said that it would accelerate disbursement of EUR1bn already allocated in 2009 and 2010 for public projects in sanitation, energy and roadbuilding.

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