Tunisia’s economy is expected to contract by 4.3 per cent in 2020 amid the coronavirus crisis, the deepest contraction since its independence in 1956, the International Monetary Fund (IMF) said on Friday.
Tunisia has confirmed 671 cases of the virus and 25 deaths. The infection is hammering its vital tourism sector which represents nearly 10 per cent of gross domestic product.
The IMF Executive Board approved earlier on Friday a $745 million emergency assistance loan to support Tunisia’s pro-active policy response to the COVID-19 pandemic, reports Reuters.
The government has said it expected an economic recession but did not give any figures, prompting the central bank last month to cut its key interest rate by 100 basis points to 6.75 per cent, its first rate cut since 2011.
The IMF, however, said that the central bank is committed to tighten monetary policy in case of exchange rate or inflation pressures and refrain from large-scale foreign exchange interventions to protect international reserves.
The IMF financing will help the authorities cover large fiscal and balance of payments needs, estimated at 2.6 and 4.7 per cent of GDP, respectively, added the fund in statement.
Prime Minister Elyes Fakhfakh said this month that the government was allocating more than $1 billion to combat the economic and social effects of the pandemic.
“Additional concessional and grant financing from external partners is critical to help Tunisia respond to the COVID-19 crisis,” the IMF said.
