EU Ready to Provide $1 Billion Loan to Tunisia Pending IMF Backing

There is still potential for the European Union to provide Tunisia’s struggling economy with a loan of 900 million euros ($1.0 billion), according to an EU official on Monday. However, additional discussions are anticipated in the third quarter, contingent upon reaching an agreement with the International Monetary Fund (IMF).

Negotiations for a $1.9 billion IMF loan have hit a roadblock since October, following President Kais Saied’s refusal to accept conditions such as subsidy cuts and trimming the public wage bill.

According to the EU official familiar with the negotiations, macro assistance remains an option, but it must align with the IMF conditions.

“Tunisia says it may not need an IMF agreement so we will see in Q3.”

Tunisia is on the edge of a major debt crisis and is suffering from shortages of essential goods. Most debt is internal but there are foreign loan repayments due later this year, and credit ratings agencies have said Tunisia may default.

On Sunday, the European Commission chief Ursula von der Leyens said the bloc will allocate 100 million euros ($112.36 million) to Tunisia as part of a “strategic partnership” deal to combat human trafficking and promote investment and trade.

(Reuters)