* Tunisia under pressure to cut deficit
* Unemployment high, attacks hit tourism
* Parliament starts debating budget draft (Adds interview with reforms minister)
TUNIS, Nov 24 (Reuters) - Tunisia plans to slightly increase bread prices for the first time since its 2011 revolution and sell Eurobonds worth 500 million euros ($593.20 million) as it seeks to slash a budget deficit, an economic adviser told Reuters.
The North African country is under pressure from the International Monetary Fund (IMF) to cut its deficit and overhaul its economy, in turmoil since the 2011 toppling of Zine al-Abidine Ben Ali.
Tunisia is struggling with high unemployment as foreign investment has dried up since 2011 and militant attacks have hit the vital tourism sector.
The government plans to keep subsidies flat in 2018 but this will mean small price increases for some subsidised goods, as it will not match an expected rise in prices for imported petrol or wheat, said Ridha Saidi, an adviser to the prime minister.
“The price of bread will ... rise by at least 10 millimes (about half a U.S. cent), or perhaps a little more than that,” he said in an interview on Thursday, referring to the price of one loaf, which normally costs 0.19 dinars. There are 1000 millimes to the dinar.
The last time Tunisia tried increasing bread prices was in 2010 in the final stages of Ben Ali’s rule. Authorities reversed the increase within months in a vain attempt to curb dissent which eventually swept away the strongman.
“There is an intention to gradually adjust the price of tea and coffee as well,” Saidi said, adding that drinking water would also become more expensive.
IMPORTS MORE EXPENSIVE
The Tunisian dinar has lost against hard currency this year, making imports more expensive.
Parliament started debating the budget draft this week calling also for increases in taxes and social security contributions, a move opposed by business associations.
Saidi also said authorities wanted to issue Eurobonds worth about 500 million euros in the first quarter to help finance the budget.
He said the expected pricing would be probably in a similar range like in February when Tunisia sold a seven-year bond worth 850 million euros at a yield of 5.75 percent.
The government also wants to sell bonds worth 2.2 billion dinars in the local market, he said.
In April, the IMF agreed to release a delayed $320 million tranche of Tunisia’s $2.8 billion in loans, on condition that it raise tax revenue, reduce the public wage bill and cut popular energy subsidies.
Tunisia expected the IMF to pay out the next tranche worth $315 million after a delegation reviewed the reforms during a visit from Nov. 29 to Dec. 13, economic reforms minister Taoufik Rajhi told Reuters.
There is a positive signal from the International Monetary Fund,” he said.
Tunisia also planned to sell Islamic bonds, or sukuk, worth $500 million next year once it overcame some legal and technical issues, he said. The government has been planing for some years to issue sukuks.
($1 = 2.4768 Tunisian dinars)
$1 = 0.8429 euros Writing by Ulf Laessing; Editing by William Maclean
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