(MENAFN- Kuwait News Agency (KUNA)) WASHINGTON, July 9 (KUNA) -- The International Monetary Fund announced Monday it would release USD 249.1 million in financing to support Tunisia's economic reforms, bringing the total loan disbursements so far to nearly USD 1.14 billion.
The announcement follows IMF's Executive Board's third review on June 6 of Tunisia's economic program under its Extended Fund Facility (EFF) Arrangement.
The IMF's Deputy Managing Director and Acting Chair, Mitsuhiro Furusawa noted the country's policy and reform implementation has "improved markedly" since the Second Review, and noted Tunisian authorities "remain firmly committed to a socially-balanced, gradual approach to macroeconomic adjustment that is supported by the four-year arrangement" under the EFF.
He also noted an uptick in Tunisia's economic growth in early 2018 and improvements in economic confidence in the face of persisting macroeconomic imbalances. However, "unemployment has dropped only marginally, inflation is high, the budget and current account deficits are large, and international reserves are below the recommended level," Mitsuhiro said in a statement.
Hitting fiscal targets requires addressing budget pressures, he asserted. Policy priorities for 2018 include "stronger revenue collection, energy price adjustments to limit the impact of international oil prices on the budget, voluntary separations for civil servants, the absence of new wage increases, unless growth surprises on the upside, and pension reform.
"The success of the authorities' program depends on sustained efforts to reduce macroeconomic vulnerabilities, ensure adequate social protection, and foster job creation, Mitsuhiro said.
Touching on the recent spike in the policy interest rate, Mitsuhiro said further rate hikes may be needed if inflation does not decelerate, especially as key interest rates remain negative in real terms. 'Exchange rate flexibility is critical to help improve the current account position and rebuild international reserves,' as well.
While Tunisian authorities have increased social transfers and progressed with the database on vulnerable families, he called for pension reform, as well as efforts to better target social policies, to "be accelerated." 'Strong implementation of the authorities' structural reform program is essential to mitigate economic, social, and political risks. This includes the appointment of the members of the High Anti-Corruption and Good Governance Authority and reforms of the Anti-Money Laundering/Combating the Financing of Terrorism regime, he said.
He added: "it will be important to sustain strong donor financial support and capacity building to help ensure a successful transition to an economy that fosters inclusive growth with the private sector as its main engine." (end) hy.bs
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