March 23, 2018 / 8:47 PM / 2 years ago

UPDATE 1-IMF disburses $257 mln loan tranche to Tunisia

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By Tarek Amara

TUNIS, March 23 (Reuters) - The International Monetary Fund on Friday approved payment of a $257 million tranche from Tunisia’s programme, the country’s central bank said.

The Fund reached a deal in 2016 to assist Tunisia with a four-year loan programme worth about $2.8 billion, tied to economic reforms aimed at keeping its deficit under control.

Tunisia has dropped into a deep economic slump following the overthrow in 2011 of autocratic leader Zine El-Abidine Ben Ali.

Since then, nine governments have failed to cut the budget deficit and the country needs $3 billion in foreign loans this year alone.

Annual inflation reached 7.1 percent last month, its highest since 1990.

But the fund said continued monetary tightening and greater exchange rate flexibility would help contain inflation, improve competitiveness and rebuild its international reserves.

The tranche is the third from the programme, bringing disbursements so far to $920 million.

Tunisia’s Prime Minister Youssef Chahedr said on Friday that ailing public companies needed to be restructured quickly, as the North African country was struggling with economic crisis and a ballooning budget deficit.

“The cost of reform is expensive but the cost of non-reform is much more expensive,” he said, adding that the state should only run companies in vital sectors.

Powerful labour unions have opposed the sale of loss-making state companies and deeper cuts in public services. (Reporting By Tarek Amara; editing by John Stonestreet)

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