Tunis, AP—Tunisia’s battered post-revolutionary economy received a much-needed boost with the IMF’s announcement that it was releasing half a billion dollars which had been delayed for months, the state news agency reported on Thursday.
Economy Minister Hakim Ben Hammouda said the IMF board had approved the 506.7 million US dollars in funds late Wednesday in Washington. It is the second disbursement from a 1.74 billion dollar standby loan granted in June and had originally been scheduled for delivery in September.
A popular uprising calling for greater freedoms and more jobs overthrew Tunisian dictator Zine El-Abidine Ben Ali three years ago, sparking similar movements across the Arab region. But in the restive aftermath, tourists fled, factories were shuttered by strikes, investment evaporated and inflation soared.
The loan was desperately needed to plug yawning holes in the budget in the face of diminished revenues and the soaring costs of subsidies and salaries. In 2013, Tunisia’s budget deficit rose to a prohibitive 8 percent of GDP.
The economic crisis was worsened by a political deadlock after the assassination of a left-wing politician in July. The IMF then withheld the second disbursement, citing the political instability.
Tunisian politicians have since resolved their differences, passed a landmark democratic constitution through consensus and formed a new technocratic government to guide the country to elections later this year.
Tunisia’s new transition government, confirmed by the elected assembly Tuesday, faces a steep task as it tries to get the economy back on track ahead of elections.
While growth rebounded somewhat in 2013 to 2.7 percent, it’s not nearly enough to tackle the country’s stubborn 17 percent unemployment rate and shore up the currency. Inflation for 2013 was nearly 6 percent. On Thursday, the Tunisian central bank cut its growth forecast for 2014 from 4 percent to 3.8 percent.
An attempt to bolster the country’s finances earlier in January by levying a small vehicle tax prompted rioting across the country.