May 5, 2020 / 4:47 PM / 20 days ago

UPDATE 1-Tunisian banks lend government foreign currency to tackle coronavirus

(Adds details)

TUNIS, May 5 (Reuters) - Tunisian banks have lent the government 1.2 billion dinars (around $410 million) in foreign currency to tackle the coronavirus crisis, the Finance Ministry said in statement on Tuesday.

The loan comes as Tunisia struggles to mobilise financial resources. It expects its economy to shrink by 4.3% in 2020, the steepest contraction since its independence in 1956.

The syndicated loan signed with 12 banks includes 257 million euros ($280 million) and $130 million. The finance ministry did not say specifically what the foreign currency would be used for.

Last April, the International Monetary Fund (IMF) approved a $745 million emergency assistance loan to support Tunisia’s response to the COVID-19 pandemic.

Tunisia has confirmed 1,013 cases of the virus and 42 deaths. The infection is hammering its vital tourism sector, which contributes nearly 10% of gross domestic product.

Tunisia had previously said it aimed to issue up to 800 million euros of bonds in the international market this year, but this plan is on hold because of the virus outbreak.

Finance minister Nizar Yaich has told Reuters that plan is “my last option now, as market reaction is still unpredictable and lending rates are very high”.

$1 = 0.9227 euros Reporting by Tarek Amara; Editing by Mark Potter

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