Tunisia’s President, Kais Saied, has rejected the terms of a $1.9 billion IMF bailout package, stating that he will not accept “diktats”. The country reached a staff-level agreement with the IMF in September, but has already missed important commitments, and donors believe the state’s finances are diverging from the figures used to calculate the deal. Without the loan, Tunisia faces a balance of payments crisis, as there are foreign loan repayments due later this year, and credit ratings agencies have warned of the possibility of default.
The terms of the loan include cuts to food and energy subsidies and a reduction in the public wage bill. When asked if he would accept these terms, Saied replied that he would not, recalling deadly riots in 1983 when the government raised the price of bread. The president warned that subsidy cuts could lead to unrest and stated that “public peace is not a game”. When asked what the alternative was to the IMF loan, he replied, “Tunisians must count on themselves.”
The country’s international bonds have dropped as much as 4.6 cents after the president’s comments, with many trading at their lowest level in around six months. Members of Saied’s government have said that there is no alternative to an agreement with the IMF.
Tunisia intends to reduce subsidy expenditure by 26.4% to 8.8 billion dinars ($2.89 billion) according to the 2023 budget, but so far, the government has not raised fuel prices this year to avoid public anger as inflation reached 10.3%, the highest level in four decades.
Saied seized most powers in 2021, shutting down parliament, appointing a new government, and ruling 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 United States and France, among others, demanding far-reaching reforms from Saied to release the cash.