Transport

Saudi Arabia loans $55m for Tunisian rail renewal

February 23, 2024, 11:04 AM

A worker at a phosphate production plant in Metlaoui, Tunisia. Phosphate accounts for 15% of Tunisia's exports

Rail essential for phosphate industry
SFD loan will update 190km of track
IMF deal with Tunisia in limbo

Saudi Arabia has signed a $55 million loan deal with Tunisia to finance the renewal of the North African country’s rail network.

The railway is used to transport phosphate, a sector that makes up around 4 percent of Tunisia’s GDP and 15 percent of the country’s exports. Tunisia plans to produce eight million tonnes by the end of this year.

The soft loan from the Saudi Fund for Development (SFD) will renew around 190 kilometres of the network.

“This sector contributes to the growth of vital opportunities toward sustainable development, leading to societal wellbeing and progress,” said SFD CEO Sultan bin Abdulrahman Al-Marshad.

The project, which is run by the Tunisian National Railway Company, has a total cost of $166 million.

The first phase will concentrate on the network in the south of the country, particularly the governorates of Sfax, Gafsa and Gabès, and is expected to take two years.

Since 1975, the SFD has supported 35 development projects and programs in Tunisia through soft loans and grants totalling over $1.3 billion.

Funds have been allocated to sectors including social infrastructure, transportation, energy and rural development. The International Monetary Fund (IMF) has forecast GDP growth of 1.9 percent for Tunisia in 2024.

The country received $500 million in financing from Saudi Arabia in July last year and a further $268 million from Italy in August.

Bailout talks with the IMF have stalled since last October, when a preliminary agreement for a 48-month loan worth close to $2 billion was reached.

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

“The IMF does remain a strong partner with Tunisia and will continue to support the authorities in their reform efforts. Should the authorities express interest in the program, we stand ready to engage with them,” Julie Kozack, director of communications at the IMF, said at a briefing on Thursday.