Tunisia expects to conclude a loan agreement with the IMF in the coming weeks: Cenbank governor

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Tunisia expects to reach an agreement with the International Monetary Fund (IMF) in the coming weeks on a three-year loan of between $2 billion and $4 billion, the central bank governor said on Sunday.

Tunisia, which is going through its worst financial crisis, is seeking an IMF loan to save public finances from collapsing.

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“The size is still being negotiated, and I think it will be between $2 billion and $4 billion, we hope to reach an agreement at staff level in the coming weeks,” Marouan Abassi told Reuters.

The government and the powerful UGTT union last week signed an agreement to raise public sector wages by 5%, a move that could ease social tensions. But they announced no further agreement on the reforms needed for an IMF bailout.

Abassi said the wage deal was an important milestone for negotiations with the IMF and would give a clear picture of the weight of wages in GDP in the years to come.

“This will give us a clear view of the wage bill which is expected to decline in the coming years,” he added.

Fitch Ratings said Friday that Tunisia’s wage deal increases the likelihood of an IMF deal.

Abassi said the possible deal would open doors for bilateral funding, including with Japan and Gulf countries.

“We have advanced discussions with Saudi Arabia on bilateral funding,” he added.

The IMF has signaled that it will not go ahead with the bailout package demanded by Tunis unless the government appeals to the UGTT, which claims to have more than a million members and has already crippled the economy through strikes.

Tunisia is struggling to revive its public finances as discontent grows over inflation nearing 9% and a shortage of many food items in shops as the country cannot afford to pay for some imports.

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