São Paulo – The International Monetary Fund (IMF) staff team that visited Tunisia between April 4 to 11 say improvement in the Africa country’s economy, although it has also identified risks to macroeconomic stability. In a statement released this Friday (13), the Fund advises the country to speed up implementation of reforms, which will help reduce the risks for the budget and decelerate inflation.
According to the IMF, the Tunisian economy currently features opposing trends. On one side, led by a good agricultural crop, increase in investments and a quick exports recovery, economic growth has been improving. On the other hand, factors such as the rise in inflation, which reached 7.6% in March, the low level of international reserves (below 90 days of import cover) and public and external debt (71% and 80% of the GDP, respectively) generate risks to macroeconomic stability.
“Adressing economic imbalances is critical to keep the recovery on-track and strengthen the foundations for fair and equitable economic growth in the future,” said the IMF’s statement. According to the Fund, containing the debt could help prevent an increase in taxes in the future. To this, the Fund suggests the reduction of “unfair subsidies” for the energy sector and to raise prices to follow international oil prices.
The Fund advises the country to avoid raising wages in the public sector, since it considers it to be very large. For the Fund, there’s a need to contain the deficits in the social security system – it suggests raising the retirement age.
The measures taken by the government to control the inflation via a raise in interest rates was praised by the Fund: “Lowering inflation will protect the poor, maintain the purchasing power of the Tunisian people, and stabilize the macroeconomic outlook.“
Regarding Tunisia’s external accounts, the IMF believes that a more flexible exchange rate will help rebuild international reserves. “Dinar’s remaining overvaluation can be corrected without an abrupt adjustment,” assesses the Fund.
Tunisian officials and the IMF will continue discussions from April 20 to 22, when they will meet in Washington, United States.
Translated by Sérgio Kakitani
