Tunisia’s $1.9 billion IMF bail in limbo, after refusing to cut subsidies

Tunisia’s $1.9 billion bailout from the International Monetary Fund (IMF) is in limbo as the country hasn’t made any proposal to replace the IMF’s demand for cutting subsidies.

While Tunisia hasn’t made much progress to meet the IMF’s demands, the country “should” scale back on “wasteful” and “socially unfair” subsidies, IMF Middle East and Central Asia director Jihad Azour said on October 12, according to a report from Reuters.

The IMF regional director said that Tunisia’s subsidies need to change before the two parties can reach even a preliminary staff-level agreement for Tunisia. He argued that Tunisia’s fuel subsidies are benefiting the wealthy and are a “fiscal waste” that coincides with high energy prices.

“By reforming the subsidy, you could allow more resources to go to finance inclusion and increase social stability,” he said.

The IMF official revealed that a new delegation from the IMF is set to visit Tunisia to stay updated on the recent economic developments in the country.

Reuters

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