(MENAFN- Emirates News Agency (WAM))
TUNIS, 4th August, 2017 (WAM) -- "Avoiding any further deterioration in this year's fiscal deficit and preparing a fair and sustainable budget for 2018 are critical," stated an International Monetary Fund, IMF, team, following their visit to Tunisia between 26th July and 3rd August.
The IMF team discussed the local economic outlook and the policy intentions of the Tunisian financial authorities under the country's economic reform programme, which is supported by a four-year IMF Extended Fund Facility (EFF) arrangement that was approved in May 2016.
"The outlook for the Tunisian economy is slowly improving, but challenges remain. Growth is on track to reach 2.3 percent in 2017, supported by the improved performance of the phosphates, agriculture and tourism sectors,' added the IMF team in its press release, according to the Tunisian News Agency, TAP.
"But structural obstacles in the economy continue to weigh on exports," said Bjorn Rother, IMF Mission Chief to Tunisia, in their end-of-mission press release on Thursday.
"Strong consumption, fuelled by wage increases, is leading to inflation, and core inflation rose to 5.5 percent in June, which is pushing elevated fiscal and external deficits even higher," he added.
These dynamics are placing downward pressure on the Tunisian Dinar. Public and external debt has increased to 65 percent in June, 73 percent of Gross Domestic Product (GDP). Slow job creation and limited economic opportunities are also continuing to affect the Tunisian people.
The Tunisian authorities have already accelerated their response to the economic pressures, and the government has increased official fuel prices in July, to reduce inefficient energy subsidies.
During the visit, the authorities expressed their commitment to building on the momentum of the recent reforms, the press release further added.
Major adjustments during this year and next year are necessary to compensate for slippages and bring the wage bill back on track, to achieve the target of 12 percent of GDP in 2020.
Continued monetary tightening, as well as exchange rate flexibility, are also essential to reducing the ongoing macroeconomic imbalances.
WAM/Tariq alfaham
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