World Bank agrees $5bn of loans to Tunisia

19 May 2016

Development bank supports business reforms

The Washington-based World Bank has agreed a five-year country partnership framework with Tunisia, involving loans of up to $5bn.

The programme aims to continue economic reforms begun during the democratic transition.

These are focused on improving the business environment to stimulate private sector investment, create jobs, especially for women and young people, and reduce the economic disparity between the coastal regions and the interior.

“Our strategy aims to support Tunisia’s efforts to transform its successful political transition into strong social and economic outcomes for its citizens,” said Marie Francoise Marie-Nelly, World Bank country director for the Maghreb. “A critical element in this process is a new social contract, based on citizen’s confidence in the government’s ability to maintain a level economic playing field and access to quality services for all.”

The investment code, competition and bankruptcy laws were singled out for reforms.

The World Bank will also invest in priority sectors, while the International Finance Corporation will be facilitating private investment.

The International Monetary Fund (IMF) has also agreed a $2.8bn four-year facility.

Tunisia was in recession in late 2015, following a number of terrorist attacks targeting foreign tourists and security services. The tourism sector contracted by 12 per cent between March 2015 and March 2016, according to the National Institute of Statistics (NIS).

In the first quarter of 2016, the Tunisian economy managed 1 per cent growth compared to the same period in 2015, and 1.4 per cent on the last quarter of 2016, thanks to the industrial sector.

Unemployment remains at 15.4 per cent, according to NIS figures.

However, the political transition is foundering, as a neo-liberal party, the Union Patriotique Libre, withdrew from the governing coalition on 16 May. The ruling party, Nidaa Tounes, has been focused on internal feuds for several months, and close to half of its deputies in the Assemply of People’s Representatives (ARP) have resigned since late 2015.

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