Tunisia has started negotiations with the International Monetary Fund for a new loan programme, but a plan to issue bonds is on hold because of the coronavirus, the finance minister said on Monday.
Nizar Yaich told Reuters in an interview that the value of the new programme had not yet been decided, but that it should last for four or five years.
Tunisia’s current IMF programme, worth $2.8 billion, was scheduled to end in April but Tunisia has agreed with the IMF to suspend it.
Only $ 1.6 billion of that programme was dispersed because some of the reforms lenders wanted were not implemented.
Tunisia had previously said it plans to issue bonds of up to 800 million euros in the international market this year.
However, Yaich said that plan was “my last option now, as market reaction is still unpredictable and lending rates are very high”.
He added that the government is studying plans to issue bonds on the local market, without giving details on amount.
He said international lenders, including the World Bank, are interested in helping the young democracy through the current difficult period.
Prime Minister Elyes Fakhfakh said on Saturday that the government was allocating $850 million to combat the economic and social effects of the crisis.
Tunisia now expects an economic recession, prompting the central bank on Tuesday to cut its key interest rate by 100 basis points.
Fakhfakh has said the government reduced its growth forecast this year to 1% from 2.7% in part due of coronavirus crisis:
The North African country has been hailed as the Arab Spring’s only democratic success because protests toppled autocrat Zine El Abidine Ben Ali in 2011 without triggering violent upheaval, as happened in Syria and Libya.
But since 2011, nine cabinets have failed to resolve Tunisia’s economic problems, which include high inflation and unemployment, and impatience is rising among lenders.