Energy

Tunisia signs $1.2bn deal to improve energy imports

May 1, 2024, 4:13 AM

Tunisian president Kais Saied rejected the terms of an IMF deal but the country has secured other funding, including from the International Islamic Trade Finance Corporation

Tunisia and ITFC sign deal
$4bn external debts due
IMF talks stalled

Tunisia has signed a deal with the International Islamic Trade Finance Corporation, which will disperse $1.2 billion in financing to the North African country over the next three years.

The money will be used to fund energy imports, according to a statement from Tunisia’s Department of Economy.

Tunisia is facing a financial crisis and has almost $4 billion in external debts due for repayment this year, up 40 percent on 2023.

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In March the EU handed Tunisia a €150 million ($163 million) grant to support economic reforms and fiscal stability.

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.

Minister of economy and planning Feriel Ouerghi Sabai also said Tunisia is keen to boost cooperation with the International Islamic Trade Finance Corporation in food security, energy and the environment.

According to the World Food Programme, Tunisia’s dependence on agricultural imports, exacerbated by economic challenges and high inflation, has led to food shortages.

It said the country’s ongoing drought has diminished harvests, destabilised dairy production and hit olive crops.

As a result, levels of malnutrition have increased, and now affect 30 percent of children under the age of five and 32 percent of pregnant and breastfeeding women.

Earlier this year the World Bank approved loans worth $520 million to address Tunisia’s food security challenge.

A loan of $300 million will supplement the Emergency Food Security Response Project, which aims to minimise the impact of four consecutive years of drought in Tunisia.

The second loan to the $220 million Tunisia Economic Development Corridor project aims to reduce regional economic disparities along the Kasserine-Sidi Bouzid-Sfax corridor in central Tunisia.

Tunisia increased the price of drinking water by up to 16 percent at the beginning of March as a result of the drought.