The World Bank supports Tunisia to confront food security challenges and finance projects to improve connectivity networks between regions (French)

The World Bank announced its approval of two loans to Tunisia with a total value of $520 million to address food security challenges and finance projects to improve connectivity networks between regional regions.

The two loans include $300 million allocated to the Emergency Food Security Project, which works to address the effects of 4 consecutive years of drought in Tunisia, including a difficult cereal season in 2023.

The bank said in a press statement yesterday evening, Friday, that this project aims to rationalize wheat imports and support small farmers by providing barley for dairy production and climate-resistant seeds for wheat producers.

He added: "This funding is part of comprehensive assistance coordinated with other development partners, and aims to strengthen the country's ability to confront food crises in the future."

The second loan, worth $220 million, will be directed to finance the Economic Development Corridor Project, which aims to reduce regional economic disparities along an axis that includes the cities of Kasserine, Sidi Bouzid and Sfax through infrastructure development, in addition to improving access to financing for small and medium enterprises.

For years, Tunisia has been facing an economic crisis exacerbated by the repercussions of the Corona pandemic, as well as the Russian war on Ukraine that has been ongoing since 2022, and the rise in grain and energy prices it caused.

Debt repayment

At the beginning of this year, Tunisian Finance Minister Siham Al-Boughdiri said that her country was able to pay all its domestic and foreign debts due in 2023 despite the enormous pressures on its public finances.

An official document showed that Tunisia will repay $4 billion in foreign debt in 2024, an increase of 40% over 2023, amid the scarcity of external financing that the government obtains as it struggles to fix its faltering public finances.

Economists say that Tunisia relied heavily on new internal loans to pay off its external debts, which greatly reduced liquidity and contributed to reducing banks’ financing of the economy.

These experts believe that the situation will be very difficult this year, amid the rise in external debt and the difficulty of repeatedly resorting to internal loans.

Local experts warn that the intense internal borrowing threatens to cause a major liquidity shortage and plunge the banking sector into a stifling crisis.

It should be noted that in 2022, Tunisia had reached an agreement at the expert level with the International Monetary Fund regarding obtaining a loan, but it had already defaulted on major commitments.

The government expects that the accumulated public debt in 2024 will reach about 140 billion dinars ($45.17 billion), or about 79.8% of the gross domestic product, up from 127 billion dinars.

Tunisia aims to reduce the fiscal deficit by imposing additional taxes on banks, hotels, restaurants, tourist cafes, and alcoholic beverage companies.

The Tunisian Ministry of Finance seeks to reduce the budget deficit over the next three years to 6.6% of the gross domestic product by 2024 and then 3.9% by the end of 2026, compared to estimates of about 7.7% for the year 2023.

Source: Agencies