government

Tunisia-IMF: ''Washington meetings constructive, agreement expected in three months'' (Ali Kooli)

May 19, 2021

TAP-Interview by Amal Hjiba) - The meetings of the Tunisian delegation with the International Monetary Fund (IMF) officials in Washington were constructive and we expect to conclude an agreement with the Fund within three months, said Minister of Economy, Finance and Investment Support Ali Kooli in an interview given to TAP.

Kooli headed the delegation to Washington on May 3-8, in an effort to revive relations and negotiations with the IMF officials and reach a new agreement that would allow Tunisia to overcome this difficult period. The delegation also had meetings with the American authorities and the World Bank (WB), as well as with the Millennium Challenge Corporation (MCC).

Nearly 7 in-person meetings were held with IMF officials, except that these meetings were limited to 10 persons in compliance with the anti COVID-19 health protocol, so some people followed the meetings by VTC.

This is the first time in a year that IMF officials have received in-person delegations, and Tunisia had been the first country to have been received,' said the Minister of Economy.

TAP: Following the latest negotiations that you conducted with IMF officials, are there any signs that a new agreement with Tunisia may be concluded? If so, what is the amount of this financing agreement, its periodicity and its purpose?

Ali Kooli: The meetings we had in Washington with IMF officials had been constructive. After intensive discussions, the IMF officials, including the executive directors of the most influential countries, who are the final decision-makers, the IMF Vice-President and the IMF Director of the Middle East and Central Asia Department, had considered our plan to be realistic and achievable and they had appreciated the fact that the plan had been shared in Tunisia before its presentation in Washington.

We had started technical discussions in Washington and we are continuing them by VTC from Tunisia as of today.

We aspire to conclude an agreement with the IMF within three months. We are counting on a shorter time frame than usual, because technical discussions usually take six months.

Our plan is ready but it is still improvable and we will discuss the progress with our IMF partners as well as with all our partners in Tunisia, namely the political parties that support us, the civil society and the three organisations that had signed agreements with the government; the UTAP, UGTT and UTICA, with which we will continue to coordinate in order to give them the details of these negotiations.

Based on initial feedback, we expect to conclude our discussions in a positive way.

The success of the negotiations is best testified by the statement of US Vice President Kamala Harris last week during her conversation with President Kais Saied, who had affirmed that the Tunisian delegation to Washington had been extremely convincing and that the United States would stand by Tunisia for direct aid and for its negotiations with the IMF.

Today we are starting the technical discussions and according to them we will determine the amount of the agreement.

Whatever the amount of the agreement, it will not be disbursed immediately, because in the discussions with the IMF, the agreement will be set over a variable period of time of two, three or four years, depending on the nature of the agreement and its disbursement will also be by instalments depending on the achievements.

Almost 70% of the IMF agreement had been disbursed in 2013 and almost 55% of the amount of the agreement had been paid out in 2017, owing to the failure to effectively implement all the structural reforms in the 2016-2020 development plan.

In this agreement, we expect the full plan to be implemented, regardless of the amount that will be agreed on.

We are looking for the validation of Tunisia's reform programme and a token of confidence in a serious, committed government that keeps its promises, especially as this image will give us a lot of credibility with other donors and help us improve the country's sovereign rating.

Our objective is to show that Tunisia is on the right track and the periodic reviews will testify to this.

A large part of the financing that is being negotiated with the IMF, the WB or with our American and European partners will be allocated to support the budget.

In the 2021 Finance Law, we have 18 billion dinars of debt to be raised, a large part of which will be used to repay the previous debt, which stands at around 15.5 billion dinars.

The necessary funding will go directly to the State budget to pay off previous debts.

Certainly, we will seek loans from certain donors for equipment projects, but we would also like to have funding for budgetary support to meet the 52 billion dinars of expenditure set out in the 2021 budget.

TAP: Tunisia officially requested the renewal of the American guarantee so that it could borrow on the international market. What was the answer to this request? And what is the amount of the bond issue you plan to launch?

Ali Kooli: The repayment of the loans we had secured in 2013, 2014 and 2015 on the international markets, most of which had been guaranteed by the United States, is due in July and August 2021, i.e. a sum of $500 million to be paid each month.

During our visit to Washington, we had reassured our American partners and expressed Tunisia's willingness to pay its debts and we had undertaken to do so.

In return, we asked them to give us the same support to borrow on the international market. We are going to borrow between $3 and 4 billion up to the end of the year, depending on our capacity to raise resources in Tunisia. Our wish is to secure a part of this amount, with an American guarantee.

We wish that all these discussions will culminate in a new guarantee by the summer, and that we can also have the agreement of our parliament, also concerning the American guarantee, to be able to enter the international market and issue loans, part of which will be carried out with the American guarantee and part without.

TAP: Have you finalised the discussions with the Millennium Challenge Corporation (MCC) on the agreement for a $500 million grant? Have you completed discussions with the Millennium Challenge Corporation (MCC) on the agreement for a $500 million grant?

When will it be concluded and how will the grant be used?

Ali Kooli: We have finalised discussions on the $500 million grant agreement with the MCC, which have been going on for four years. We discussed all the outstanding issues and we reached an agreement during this visit to Washington. It is a huge success, because when the discussions first started four years ago, the amount was around $200 million, and now we have managed to raise it to $500 million. If the board adopts the recommendations of the team that discussed this agreement, Tunisia will get a $500 million grant, equivalent to 1.3 billion dinars, which is a considerable amount, never got in Tunisia's history.

I hope that an agreement on this grant will be signed by the Prime Minister at the beginning of July 2021, and that it will be used to renovate the transport network, particularly the port of Rades, and to upgrade our irrigation system and water management.

This programme will also support the poor, rural women and the unemployed.

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