Soaring olive oil exports help Tunisia balance books

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• Sales up 83% in first five months
• But talks with IMF still stalled
• Sovereign default ‘more likely than not’

Tunisia’s soaring olive oil exports have almost doubled to close to $1 billion in just five months, helping it claw back its current account deficit.  

However the increased revenues merely “paint over the cracks” and the country is still probably heading towards a sovereign default, according to an economic expert.

Tunisia’s current account deficit narrowed to 2.3 percent of gross domestic product in 2023, around $3 billion, from 8.5 percent the previous year.

This was buoyed by the surge in olive oil exports, which James Swanston, Mena economist at Capital Economics, said had doubled in the second half of last year compared to the same period in 2022.

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Tunisia is the second largest global producer of olive oil, behind Spain.

Its olive oil export earnings for November 2023 to March 2024 reached nearly TND2.9 billion ($923 million), the National Agricultural Observatory said in its monthly report. This is up almost 83 percent compared to the same period a year before.

In 2023, total olive oil revenues hit a record $1.3 billion.

• Tunisia signs $1.2bn deal to improve energy imports
• Tunisia secures $520m in loans to attack food crisis
• Tunisia pays off all 2023 debt

Globally the price of olive oil hit a record high of $10,281 per metric tonne in January, although this dropped to $9,908 at the end of March, data from the  International Monetary Fund showed.

Swanston said that, after drought and extreme heatwaves in olive oil producing countries severely affected production, the increased revenues merely “paint over the cracks” of Tunisia’s financial woes.

“Sovereign dollar bond spreads have narrowed sharply this year, but we still think that a sovereign default is more likely than not,” Swanston said.

In March, the EU handed Tunisia a €150 million ($163 million) grant to support economic reforms and fiscal stability. The World Bank also approved loans worth $520 million to address Tunisia’s food security challenges.

Last year Saudi Arabia also agreed to provide Tunisia with a $500 million package of financial assistance.

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