President Kais Saied of Tunisia stated on Thursday that he would not accept “diktats” and implied that subsidy reductions could lead to unrest. His harshest rejection to date of the terms of a delayed $1.9 billion IMF rescue agreement.
Although a staff-level agreement for the loan was signed with the IMF in September, Tunisia has already reneged on its commitments. Donors are concerned that the country’s finances are diverging further from those used to negotiate the contract.
Without a loan, Tunisia’s balance of payments will collapse. Credit rating agencies have warned that Tunisia may default on its domestic and international obligations later this year.
When asked whether he would accept the loan conditions, which include eliminating food and energy subsidies and the public salary bill, Kais Saied told reporters, “I will not accept diktats.”
“Public order is not a game,” he said, recalling the violent uprisings that erupted in the North African country in 1983 when the government raised the price of flour.
In response to a query about whether or not to accept an IMF loan, the president stated, “Tunisians must rely on themselves.”
Following the statements, the value of the nation’s overseas bonds fell by as much as 4.6 cents, with several trading at their lowest level in approximately six months.
According to Saied’s cabinet members, it is impossible to avoid entering an agreement with the fund.
The Tunisian government intends to reduce subsidy expenditure by 26.4% in 2023 to save $2.89 billion.
Despite inflation reaching its greatest level in four decades, 10.3%, the government has not raised petroleum prices this year, presumably to avoid public outrage.
In 2021, following years of unrest and what he perceived to be pervasive corruption among the political elite, Saied usurped the majority of power, disbanding parliament, establishing a new administration, and moving to rule by decree.
He has rejected what he considers to be foreign interference in Tunisian affairs and blamed corruption for the country’s economic difficulties.
For months, discussions with the IMF have stalled due to the United States and France’s insistence that Saied implement comprehensive reforms prior to the release of bailout funds. Italy, however, has argued that Europe must promptly intervene to save Tunisia’s economy.
Last month, Italian Prime Minister Giorgia Meloni warned that if Tunisia’s financial stability is not assured, Europe could face a vast influx of North African migrants.
