Tunisian workers handle steel reinforcement on the construction site of a bridge in Tunis on November 6, 2007
Tunisian workers handle steel reinforcement on the construction site of a bridge in Tunis on November 6, 2007 © Fethi Belaid - AFP/File
Tunisian workers handle steel reinforcement on the construction site of a bridge in Tunis on November 6, 2007
AFP
Last updated: January 30, 2014

Tunisia central bank optimistic after IMF agrees loan

Tunisia's central bank expressed "optimism" Thursday after the IMF released a delayed $506 million loan to support the fragile economy following major steps this week to end months of political turmoil.

The loan, part of a two-year, $1.76 billion (1.3 billion euro) package agreed last year, was approved by the International Monetary Fund on Wednesday after the new caretaker government of technocrat Prime Minister Mehdi Jomaa was sworn in.

The second tranche had been held up by the political instability that gripped Tunisia after the killing of two prominent opposition MPs last year, and also follows parliament's adoption of a long-delayed new constitution on Sunday.

The central bank highlighted "its optimism regarding the progression of the political process, and its benefits in terms of improved visibility for investors and financial institutions... especially after the (International Monetary Fund) announcement."

But it also stressed the "importance" of key challenges still facing Tunisia, notably the need to accelerate growth and job creation.

The bank called for swift adoption of the "economic and financial reforms urgently needed to steer the national economy along the path to strong growth."

Tunisia's economy fell into recession after the Arab Spring uprising that toppled long-time strongman Zine El Abidine Ben Ali three years ago, and its recovery has been hampered by the turmoil that followed the two political assassinations by suspected jihadists in 2013.

Social unrest has aggravated the economic situation, with frequent protests and strikes in parts of the country, while administrative deadlock and the rise in jihadist violence have discouraged investors and held up reforms.

Last month, before the swearing-in of the new consensus government to replace an Islamist-led administration, the World Bank said the protracted deadlock with the mainly secular opposition was harming the economy.

It predicted 3.0 percent growth in 2014, which it said was insufficient to reduce the rate of unemployment, a driving factor behind the 2011 uprising.

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