Tunisia Central Bank to explore funding sources
Tunis-Tunisia is in talks with the International Monetary Fund, the World Bank and other agencies on funding options, although the country’s reserve levels are for now adequate to support the economy, Tunisia’s new central bank governor said on Wednesday,
“I don’t need it now, our reserves are fine and our fiscal situation is OK,” Mustapha Kamel Nabli told reporters at the Washington-based Carnegie Endowment for International Peace.
“We’re trying to determine what is the best way to proceed,” said Nabli, a former World Bank official, who took office following a popular uprising that drove President Zine al-Abidine Ben Ali from power.
Earlier, Nabli told an audience that Tunisia could face financing needs, including for its budget, within the next several months unless economic activity picked up. He said only that funding support would likely be on the high side.
“We expect to have support that is higher than the normal,” said Nabli. He said Tunisia would host an international conference at the end of March or in early April to detail its economic and political plans.
He said he was closely watching political developments in Libya because it could have economic implications for Tunisia through a decline in trade and worker remittances.
Nabli said it was vital that the Tunisian economy was soon fully up and running and people went back to work, so production and exports could resume and the government started focusing on festering social pressures before elections.
He cited “blatant” corruption and high levels of unemployment as among the main reasons for Tunisia’s revolt.
“The major risk I see is in three or four months if the production doesn’t come back and employment doesn’t come back, then we may face external pressures and we might (begin to face) fiscal pressures as well,” he added.
Nabli said he was concerned that the economic situation would not be back to normal in time for elections, creating additional risks. It was important to avoid “a negative loop” between economic and political developments, he added.
“The worst that could happen is that economic tensions develop at the same time we’re having elections,” said Nabli.
He said the challenge for a new Tunisian government was to build confidence in market reforms by showing that they could benefit everyone and not just a few.
“That’s a tricky one. Market reforms contributed to corruption … and it’s not going to be easy to go back to them, so we have to again build trust in market reforms,” he said.
Nabli said a slowing of market reforms should be expected until the government had won over the confidence of people through more transparent, competitive bidding systems for state assets.
Speaking at the same event, IMF Director for the Middle East Masood Ahmed said it might take time before tourists and investors felt safe to return to Tunisia.
“Tunisia’s economy has been prudently managed and it can afford to go through a period of some slowdown, so we should not be surprised if these negative short-term impacts work their way through the system. We should expect them,” said Ahmed.
He said it should be expected that Tunisia would face short-term pressures to spend more until economic activity resumed at full speed.
“It wouldn’t surprise me if that happens, it would surprise me if it didn’t happen, but the question becomes: is it manageable?” he said.
“If we look at the numbers, a broad range of scenarios is still manageable, so I’m not so focused on the fact that things are going to be slightly worse this year,” he added.