Hopes faded on Friday for a stalled $1.9 billion IMF bailout package for Tunisia after President Kais Saied said he would not comply with “diktats” and that the required subsidy cuts could cause unrest.
Tunisia reached an agreement with the IMF for the loan in September, but it has already missed key commitments, and donors believe its finances are increasingly diverging from the figures used to calculate the deal.
Without a loan, Tunisia faces economic meltdown. Foreign loan repayments are due this year, and credit ratings agencies have said the country may default.
The terms of the loan include cuts to food and energy subsidies and a reduction in the public wage bill, but Saied said: “I will not hear diktats.” The alternative to the loan, he said, was that “Tunisians must count on themselves.”
Saied seized most powers in 2021, shutting down parliament, appointing a new government and moving to rule by decree —moves he said were necessary to end years of chaos and rampant corruption among the political elite.
He has blamed Tunisia’s economic problems on corruption and rejected what he sees as foreign interference.
Bailout talks with the IMF have been stalled for months, with the US and France, among others, demanding far-reaching reforms from Saied to free up the cash. Italy, however, a key destination for migrants from North Africa, says Tunisia should be quickly supported to avoid the financial collapse.
Europe risks seeing a huge wave of migrants arriving on its shores if Tunisia’s financial stability is not safeguarded, Italian Prime Minister Giorgia Meloni said last month.