(Bloomberg) -- Tunisia hopes to reach a crucial deal with the International Monetary Fund in April, the finance minister said Wednesday, rejecting speculation that the nation faces imminent bankruptcy.
“The situation is difficult,” Sihem Boughdiri Nemsia said in an interview with broadcaster Shems FM. “Authorities are trying to stabilize the economy,” she said. Concerns over insolvency are however “alarmist,” and authorities can afford to pay public-sector wages for the coming months.
The comments, aimed at allaying concerns about Tunisia's solvency amid an ongoing political and economic crisis, come as the central bank is set to meet Wednesday to review interest rates.
Over the past few months, the regulator has sounded repeated alarms about the state of the economy at a time when the North African nation is struggling to cope with political uncertainty, inflation concerns, and worries about the future impact on emerging markets of Federal Reserve policy tightening.
Tunisia's central bank has kept its benchmark rate unchanged at 6.25% for more than a year. But in its last meeting in December, it stressed the “need to accelerate the establishment of a clear-sighted economic reforms plan, capable of restoring both international donors' and investors' confidence.”
Such a step, it said, was key to securing macroeconomic and financial balances, and coping with public finances “which are being weighed down by strong pressure.”
Economic angst has blighted Tunisia for the past decade, with successive post-Arab Spring governments looking to curb youth unemployment and a public wage bill that's among the highest in the world as a percentage of gross domestic product. Those concerns have become more acute since President Kais Saied last year suspended parliament and fired his premier in a power grab critics dubbed a coup.
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Since then, prospects for an economic rebound in the short-term have dimmed as officials grapple with how to curb spending while trying to address the demands of a population that's shown little patience with cost-cutting efforts.
The minister dismissed claims that the public sector, especially bloated public enterprises, were crowding out private-sector access to financing.
Officials must win the backing of the powerful UGTT trade union, which has repeatedly resisted efforts to cut wages, if efforts to stabilize the economy are to succeed. Nemsia said the government expects the UGTT and the nation's business lobby, Utica, to respond within days to a list of reforms the country will need to implement through 2026 to obtain financing from the Washington-based lender.
The two organizations “understand the sensitivity of this phase,” said the minister, adding that a failure to reach an agreement with them could delay an IMF deal.
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