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LK UPDATE 1-Tunisia raises petrol prices by 6.3 pct to trim budget gap
July 1, 2014 / 1:30 PM / 3 years ago

LK UPDATE 1-Tunisia raises petrol prices by 6.3 pct to trim budget gap

(Adds budget details, background on measures)

TUNIS, July 1 (Reuters) - Tunisia’s government cut fuel subsidies on Tuesday, raising petrol prices by 6.3 percent in an effort to trim its budget deficit, using politically sensitive austerity measures.

The North African state has forecast a budget deficit of 8 percent of gross domestic product this year. It has said it will reduce spending to shore up an economy still recovering from a 2011 uprising.

Authorities on Tuesday lifted the price of lead-free petrol to 1.670 dinars ($0.99) a litre from 1.570. The last increase in fuel prices was in March 2013.

In January, the government was forced to suspend planned increases in energy prices and vehicle taxes that were proposed in its 2014 budget, after popular protests broke out over the measures.

Subsidies are a sensitive issue in Tunisia, where bitter anger over unemployment, economic deprivation and social injustice exploded into the revolt in 2011 that triggered the Arab Spring uprisings in other countries.

Prime Minister Mehdi Jomaa’s government is taking on Tunisia’s budget deficit by seeking international aid and looking at subsidy cuts to reduce high public spending.

Tunisia’s planned subsidy reforms and public spending cuts should help reduce the budget deficit by 1.5 billion dinars in 2014, Jomaa said this year.

$1 = 1.6791 tunisian dinars Reporting By Tarek Amara; Editing by Larry King

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