An International Monetary Fund (IMF) mission visiting Tunis March 23–25 had constructive discussions on the Tunisian authorities’ reform program. The discussions also covered the impact of the war in Ukraine, which poses important challenges for the entire world and for Tunisia, right at the moment that the country is emerging from the pandemic.

The mission wishes to thank the Head of Government; the Ministers of Finance, of Economy and Planning, of Social Affairs, of Industry, Mining and Energy, and of Commerce; and the Governor of the Central Bank of Tunisia for the discussions.

Tunisia is facing major structural challenges that result in deep macroeconomic disequilibria, a weak growth in spite of its strong potential, a high unemployment rate, weak investment, and social inequality. The impact of the pandemic and the war in Ukraine are now adding to these structural challenges.

The authorities’ program aims to overcome these challenges in a durable and equitable way. In the short term, it aims to mitigate the impact of the war in Ukraine, while in the medium term, to assure stronger, durable inclusive growth and social protection. In that context, the program seeks to create fiscal space for public investment and increase social protection.

The IMF considers that a conscientious reduction of the fiscal deficit through equitable taxation reform, strict control over the public sector wage bill, better targeted subsidies, and deep reforms of state-owned enterprises are necessary to restore macroeconomic stability, as well for improving the efficiency of state-owned enterprises, and strengthening the competitiveness of the Tunisian economy. Initiatives aimed at enhancing competition and the business climate are also critical to unlock the country’s potential growth and job creation.

The IMF supported Tunisia when it was coping with the Covid-19 pandemic in a particularly difficult global environment. At this moment we continue to stand by the side of the Tunisian authorities in their efforts to advance economic and social reforms to the benefit of the population. In this context, the mission has made further progress in the technical discussions with the Tunisian authorities.