PREVIEW
As financial pressures mount rapidly, the country's wealthy elite faces heavy pressure
President Kaïs Saïed appears to have ruled out the prospect of a $2 billion loan agreement with the IMF in favour of new, and as yet unspecified, tax rises on rich Tunisians.
After provisional agreement was reached on a $1.9bn IMF loan last October, Saïed paused the talks, falling back on plans for domestic tax rises. 'Foreign diktats that will lead to more poverty are unacceptable,' President Saïed said in April.
Progress on the IMF talks has been stalled by Saïed's refusal to countenance its demand for cuts to energy and food subsidies. The fund has also been demanding cuts to the public wage bill,and reform of Tunisia's more than 100 public companies (Dispatches 11/4/23, President Saïed picks a fight with the Fund and AC Vol 63 No 22, Unions and oppositionists warn of a social explosion).
At a meeting with Prime Minister Najla Bouden on Thursday, Saïed said the subsidies would be more targeted. He mooted 'taking surplus money from the rich to give to the poor', according to Omar Ibn Al-Khattab, Islam's second caliph.
'Instead of lifting subsidies in the name of rationalisation, it would be possible to introduce additional taxes for those who benefit from them without needing them', he added.
On 1 June, the parliament in Tunis signed off on a US$500 million loan from the African Export-Import Bank but the prospect of a balance of payments crisis this year still looms large.
Copyright © Africa Confidential 2024
https://www.africa-confidential.com
Prepared for Free Article on 08/09/2024 at 01:15. Authorized users may download, save, and print articles for their own use, but may not further disseminate these articles in their electronic form without express written permission from Africa Confidential / Asempa Limited. Contact subscriptions@africa-confidential.com.