Skip to content Skip to Search
Skip navigation

EU throws Tunisia a financial lifeline with $163m grant

People are seen out shopping in the old city of Tunis, Tunisia, 23 August 2023. Tunisia's Ministry of Tourism and Handicrafts has officially restarted tourism in the country after the challenges caused by COVID-19 in 2020. Up to 10 August 2023, a total of 5.4 million tourists have picked Tunisia for their vacations (Photo by Yassine Mahjoub/NurPhoto)NO USE FRANCE Yassine Mahjoub/NurPhoto via Reuters
The EU grant is designed to help stabilise the economy in Tunisia; proposed reforms include a reduction in the public wage bill
  • EU help to ‘support reforms’
  • Tunisia faces urgent debt
  • IMF talks remain in limbo

The European Union has handed Tunisia a €150 million ($163 million) grant to support economic reforms and fiscal stability as the North African country attempts to fend off a financial crisis.

Almost $4 billion in external debts are due for repayment this year, up 40 percent on 2023.

Although Tunisia managed to pay an €850 million ($922 million) eurobond last month, it took parliamentary approval to obtain direct financing from the central bank worth TND6 billion ($1.9 billion) to cover the payment and other urgent foreign debts.

Tunisia’s foreign reserves stood at TND23.56 billion on Monday, enough to fund 108 days of imports.

The EU grant is intended to “support Tunisia in stabilising its macroeconomic situation and in its efforts to improve the management of public finances and the business climate,” a statement from the European Commission said.

The statement said that the transfer from the EU to the Tunisian public treasury was in the form of a donation.

“The EU stands ready to continue supporting Tunisia with a view to moving towards sustainable and inclusive growth,” said Olivér Várhelyi, the European commissioner for neighbourhood and enlargement.

The donation is part of a “strategic and comprehensive” partnership deal signed by Tunisia and the EU in Tunis last year based on five pillars: macroeconomic stability, economy and trade, green energy transition, people-to-people links, and migration and mobility.

After a meeting between the two in June, the EU said it was prepared to offer Tunisia a €1 billion loan to prop up its economy and tighten border controls on condition that it accepted sweeping reforms laid out by the International Monetary Fund.

These include cuts to food and energy subsidies and a reduction in the public wage bill.

Talks between Tunisia and the IMF have stalled since last October, when a preliminary agreement for a 48-month loan worth almost $2 billion was reached.

Person, AdultTunisian Presidency/Reuters
President Kais Saied, right, appointed bank governor, Fethi Nouri, in Febraury

Tunisian president Kais Saied’s government refused to accept the terms of the proposed deal, which remains in limbo.

James Swanston, Middle East and North Africa economist with Capital Economics, said: “President Saied’s unwillingness to sign up to an IMF deal means that a sovereign default still looks more likely than not.”

Saied named a former central bank board member, Fethi Nouri, as the new governor of the central bank on February 15.

On Friday Tunisia increased the price of drinking water by up to 16 percent as a result of the drought that has hit the country for the past five years.

Latest articles

Alstom's upgraded passenger transit system will help reduce emissions at King Abdulaziz International Airport

Alstom to upgrade driverless transit system at Jeddah airport

French train maker Alstom will upgrade the automated and driverless passenger transit system at King Abdulaziz International Airport, as the Jeddah airport aims to receive 114 million passengers by 2030. As part of the contract, Alstom will design, engineer, supply, integrate, test and commission a complete system upgrade of its Innovia automated people mover (APM) at the airport’s terminal […]

The Al Dhafra solar PV project. Ewec plans to increase Abu Dhabi’s solar production capacity to 7.6 GW by 2030

Abu Dhabi to generate 50% power from green sources by 2030 

Abu Dhabi plans to generate more than half of its electricity from renewable and clean energy by 2030, a senior Emirates Water and Electricity Company (Ewec) official has said. The state-owned entity is increasing the emirate’s solar energy production plan to 7.6 gigawatts (GW) by 2030, the UAE state-run Wam news agency reported, quoting CEO Othman Juma […]

An Acwa Power solar facility in Saudi Arabia. The Bank Of China loan will help finance its solar projects in Uzbekistan

Acwa Power takes China bank loan in first for Saudi Arabia

Saudi energy major Acwa Power has secured an $80 million loan from the Bank of China as the appeal of the Chinese Renminbi as a trade currency gains traction in the GCC. Acwa Power, the world’s largest private water desalination company and a first mover into green hydrogen, has received the equity bridge loan to […]

Solar power panel

Cost of Xlinks Morocco-UK project balloons by a third

The cost of an ambitious project to deliver green energy from the south of Morocco to power homes in the UK has ballooned by more than a third to $30 billion. Xlinks First is behind the Morocco-UK renewables project, which would construct the world’s longest high-voltage direct current (HVDC) subsea power cable between the North […]