Tunisia Under Stress

Tunisia Under Stress

Tunisia is struggling with dire economic challenges, including inflation, food shortages, and high unemployment. In the country where the Arab Spring was ignited over a decade ago, hope for a better life, both economically and politically, has faded.

There is fear that Tunisia’s economic crisis could lead the country to default on its loans, leading to a possible collapse in state finances and further misery for the Tunisian people.

In October 2022, the International Monetary Fund, the IMF, and the government of Tunisia agreed to a deal which would give $1.9 billion of IMF support to Tunisia on condition of certain reforms, including cuts to subsidies on flour and fuel. Negotiations on details of the reforms have stalled in recent months.

In a visit in June to Tunisia, European leaders - European Commission President Ursula von der Leyen, Dutch Prime Minister Mark Rutte and Italian Prime Minister Giorgia Meloni – announced a possible offer of financial help to Tunisia: a loan of over 1 billion euros. The European Union and Tunisia agreed to work together on a partnership package which would cover the areas of trade, energy, migration, and people to people ties. The hope is that such a package could also spur Tunisia to present a revised reform plan to the IMF.

At a press briefing in Washington with Italian Foreign Minister Antonio Tajani, Secretary of State Antony Blinken said the United States would welcome Tunisia’s presentation of a revised reform plan to the IMF and for the IMF to be able to act on the plan:

“This is a sovereign decision for Tunisia; it’s not a decision for us or anyone else to make. But it’s clear that Tunisia needs additional assistance if it is going to avoid falling off the proverbial economic cliff.”

Secretary Blinken praised what the EU has offered as a significant step in aiding Tunisia:

“But something more comprehensive – that, in our judgement, the IMF can best provide – would be important to actually helping Tunisia get on a sustainable and positive path.”

“Fundamentally, the government of Tunisia has to make decisions about how it wants to proceed, and we would hope that there’s a practical way forward … with, as necessary, appropriate flexibility,” declared Secretary Blinken. “We want to see Tunisia succeed, and we want to provide the support necessary for its success.”