Tunis, Reuters—Qatar National Bank, part owned by the Gulf state’s sovereign wealth fund, has given Tunisia a USD 500 million deposit to support its foreign currency reserves, a senior official in Tunisia’s central bank said on Saturday.
The deposit was made as Tunisia’s Islamist-led government faces pressure from lenders such as the World Bank and the International Monetary Fund to make reforms to trim its budget deficit and end a political crisis.
“Qatar National Bank gives a deposit of USD 500 million to the central bank, which supports foreign currency reserves…it is a shot of oxygen for the economy,” the official told Reuters, asking not to be identified because he was not authorized to speak to the media on the matter.
Qatar, which supports Islamist parties who rose after the Arab Spring revolts, gave similar deposits to Egypt during the rule of former Islamist President Mohamed Mursi before he was overthrown by the army in July.
Disagreements with the new government pushed Qatar to retreat from commitments to other deposits for Egypt.
Tunisia’s deposit will shore up the economy and also help shippers of essential goods such as grain to find foreign currency to pay for imports.
The official said that the deposit will be paid back over five years with an interest rate of between 2.5 and 3 percent.
After months of crisis, Tunisia’s Islamist-led government is in talks with secular opponents to hand over power to a caretaker administration that will govern until new elections are held early next year.
Nearly three years after its revolt ousted Zine El-Abidine Ben Ali, months of political deadlock have weakened the country’s economic outlook.The African Development Bank or AFDB cancelled a loan for TND 500 million or around USD 300 million because of instability, the government said last month.The government forecast 3 percent growth this year and 3 percent in 2014. The budget deficit will be 6.8 percent of GDP for 2013.Tunisia is struggling to revive its economy because of a lack of security and political instability in a country heavily reliant on foreign tourism and remittances from Tunisians living overseas.
Fitch cut last month Tunisia’s sovereign rating two notches and warned it could cut further on political uncertainty and its potential damaging economic effects.