IMF Aid Talks: Tunisia

FILE: The seal of the International Monetary Fund (IMF) is seen at its headquarters in Washington, DC. The IMF has received a request for aid from Tunisia., with discussions slated for early July.

The International Monetary Fund is sending a team to Tunisia this coming week to begin formal talks on a new financial aid package, an IMF official said Friday.

"An IMF mission will be in Tunis from July 4 to initiate negotiations on an IMF-supported program," an IMF spokesperson told AFP.

The heavily indebted country, reeling from price hikes on imports such as oil and wheat since Russia invaded Ukraine, is seeking a two-billion-euro loan, according to a source with knowledge of the preliminary talks.

The Washington-based crisis lender said last week it was ready to begin the formal negotiations, but said the severity of the crisis will require the government to implement "ambitious reforms" to deal with fiscal imbalances.

Tunisia turns to the global lender for a new loan to save an economy ravaged by years of high unemployment, inflation and public debt even pre-dating its 2011 revolution.

While the fund welcomed the program proposed by President Kais Saied, the powerful UGTT trade union rejected the plan that includes a freeze on the public sector wage bill, some subsidy cuts and a restructuring of state firms.

The loan bid comes as Saied is handed the draft of the new constitution he sought which makes the presidency a "strong executive. " It also diminishes the role and scope of the legislative branch.