How will the World Bank's decision to suspend its cooperation with Tunisia affect the country's economy?

Tunisia -

Tunisia's wound has not yet recovered from accusations of racism against its regime, despite the measures taken in favor of immigrants, until the World Bank decided to temporarily suspend partnership discussions with it, a decision that differs from the views of economists on its repercussions on the country's economic situation.

The World Bank suspended, until further notice, discussions of partnership and future cooperation with Tunisia for the period between 2023 and 2027, after the attacks it witnessed against migrants from sub-Saharan African countries, following a speech in which President Kais Saied denounced the arrival of hordes of irregular migrants.

In a note sent to employees last Sunday, Bank President David Malpass expressed the World Bank's concern about the escalation of racially motivated attacks against these immigrants, explaining that the World Bank is currently temporarily suspending discussions on the partnership framework with Tunisia.

Serious consequences

Regarding the consequences of the World Bank's decision on the already dire economic situation in Tunisia, economist Ezzedine Al-Saidan says that the World Bank's decision to suspend future cooperation discussions for the period between 2023 and 2027 will further complicate and worsen the country's economic and financial situation.

He explains to Al-Jazeera Net that the World Bank was supposed to discuss the file of future cooperation projects with Tunisia for the period 2023 and 2027 at a specific meeting on the 21st of this month, but he decided not to consider this file on that date against the background of his position rejecting racism and discrimination.

Al-Saeidan adds that there is a temporary suspension of the World Bank's cooperation with Tunisia, "and this complicates matters," explaining that suspending consideration of discussing and financing cooperation projects will deprive the country of additional resources to advance development, noting that the World Bank's interventions in Tunisia are related to combating poverty and advancing development. .

financing needs

One of the most prominent effects of the World Bank’s decision to temporarily suspend its cooperation with Tunisia is the negative messages that will be picked up by a number of donors, which link their position to lending to Tunisia on the basis of the positions of the International Monetary Fund and the World Bank, which may deprive Tunisia of funds in hard currency.

Al-Saedan says that Tunisia needs this year, according to estimates of the 2023 budget, additional loans estimated at about 25 billion dinars (7.9 billion dollars), of which about 15 billion dinars (4 billion dollars) are external loans in hard currency to finance its expenditures and imports and pay off its debts in foreign currency.

And since Tunisia has not yet obtained the approval of the International Monetary Fund to start disbursing the first installment of a total loan of $ 1.9 billion, in addition to the World Bank’s temporary suspension of future partnership discussions until 2027, it will suffer from a very confusing financial crisis.

The IMF did not set a date for discussing Tunisia's request for a first installment of that loan, which allows it to obtain other loans in hard currency from international institutions or within the framework of bilateral cooperation between countries, which increases fears of fluctuation in the supply of essential goods.

Several public institutions, such as the Chamber of Commerce and the Central Pharmacy, suffer from difficulties in supplying the local market with basic materials and necessary medicines, and the main reason is that foreign suppliers have lost confidence in these institutions, which suffer from a lack of hard currency resources.

Continuous cooperation

On the other hand, Al-Saedan denied the validity of the news circulating about the possibility of permanently suspending the World Bank's cooperation with Tunisia, indicating that the World Bank noted in its internal memorandum Tunisia's tendency to take positive measures regarding the situation of irregular migrants.

He stressed that the relations between the World Bank and Tunisia will remain continuous despite the temporary suspension of partnership discussions and future cooperation for the period between 2023 and 2027, explaining that the World Bank Charter provides for combating racism and racial discrimination in all its forms and contexts.

For his part, economist Moez Hadidan told Al-Jazeera Net that he "smells the scent of politics" smelling from the internal memorandum of the World Bank regarding the temporary suspension of cooperation with Tunisia, and he did not rule out that some influential countries had pressured within the bank so that Tunisia would be a country of residence for immigrants.

The World Bank has suspended, until further notice, discussions of partnership and future cooperation with Tunisia for the period between 2023 and 2027 (French)

Are there negative repercussions?

Hadidan asserts that all countries of the world, led by developed countries, apply strict measures against irregular migrants with the aim of regulating migration, suggesting that the cooperation between the World Bank and Tunisia will return to normal, especially after taking positive measures to protect the foreign community.

At the present time, Hadidan does not see any temporary negative repercussions on the economic situation in Tunisia as a result of the temporary suspension of discussions about future projects that will be financed by the World Bank, explaining that what happened was an internal memorandum sent to the World Bank without taking an official decision.

He stressed that the official decision must be taken by the Board of Directors of the World Bank to temporarily suspend cooperation with Tunisia, but he acknowledged the possibility of negative repercussions on the country's economic and financial situation in the event that this happened, given the erosion of Tunisia's hard currency stock and its need to borrow.

Hadidan says, "At that time, Tunisia will be deprived of the financing of the World Bank, one of the 3 most important international donors, in addition to the International Monetary Fund and the European Union," noting that the World Bank is one of the most important partners supporting the fight against poverty and pushing development projects over the decades in Tunisia.

Depriving Tunisia of external loans - whether from the IMF or the World Bank - will result in major difficulties in terms of the state's ability to pledge to finance its expenditures for the supply of basic materials and fuel, raw materials for manufacturing, or the payment of external debt, which puts it at a dangerous juncture.

Hadidan says that Tunisia entered, with the reduction of its sovereign numbering to the lowest levels by the international sovereign numbering agencies, in a dangerous turning point before it reached the stage of not fulfilling some of its financial pledges, stressing the need to quickly turn the page on immigrants and carry out the necessary reforms.

African immigrants complained of being subjected to racist attacks following President Kais Saied's speech, which called for measures to curb irregular migration among sub-Saharan Africans.

Soon, accusations against the Tunisian regime of adopting racist rhetoric expanded, but the Tunisian president rejected them, stressed the protection of refugees, and approved a number of urgent measures to protect immigrants residing in Tunisia.