March 8, 2020 / 11:05 AM / 3 months ago

Tunisia cuts 2020 growth forecast to 1% from 2.7%: PM

TUNIS (Reuters) - Tunisia has cut its economic growth forecast for this year to 1% from the 2.7% envisaged in the 2020 budget, Prime Minister Elyess Fakhfakh said on Sunday, as the vital tourism sector faces a strong threat due to the coronavirus crisis.

FILE PHOTO: Tunisia's prime minister designate Elyess Fakhfakh speaks during a news conference in Tunis, Tunisia January 24, 2020.REUTERS/Zoubeir Souissi

He told the local Magreb newspaper that the coronavirus crisis would knock half a percentage point off growth.

Tunisia faces urgent economic problems after a relative decline in the nine years since the ouster of veteran autocrat Zine El-Abidine Ben Ali, who died in exile in September.

Unemployment is more than 15% nationally and 30% in some cities, while inflation is high, and successive governments have struggled to rein in high fiscal deficits and control the public debt.

Fakhfakh, who took office two weeks ago, did not give more details on lowering growth forecasts, but it is widely expected that the vital tourism sector will be affected by the coronavirus, in addition to the agricultural sector, which may be exacerbated by the severe shortage in rainfall rates.

Last year, nine million tourists visited Tunisia for the first time.

Tourism accounts for about 8% of Tunisia’s GDP and is a key source of foreign currency.

Fakhfakh added that he will seek to obtain the sixth installment of a loan with the IMF to help the country obtain other external financing and issue bonds.

The North African country needs to borrow about $3 billion internationally in 2020 to meet spending commitments.

“If the IMF delegation does not visit Tunisia until March 20, we will lose a lot,” he said.

Tunisia struck a deal with the IMF in December 2016 for a $2.8 billion loan package to overhaul its sclerotic economy, including steps to cut chronic deficits and trim bloated public services.

The IMF disbursed the current program last loan tranche worth $247 million in June last year.

Since then, negotiations on the sixth review of the deal have stalled due to a political crisis following the October election.

Reporting by Tarek Amara; Editing by Mark Potter and Louise Heavens

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