Tunisia’s President Kais Saied has proposed taxing the country’s wealthiest citizens to avoid the “foreign diktats” of the International Monetary Fund (IMF).
Despite reaching an agreement in principle last October on a bailout package worth nearly $2bn, talks with the IMF have stalled for months over demands to restructure public bodies and lift subsidies on basic goods.
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During a meeting with Prime Minister Najla Bouden on Thursday, Saied floated the idea of “taking surplus money from the rich to give to the poor”, citing a quote attributed to Omar Ibn Al-Khattab, Islam’s second caliph.
“Instead of lifting subsidies in the name of rationalisation, it would be possible to introduce additional taxes on those who benefit from them without needing them,” Saied said, adding that he believed such a mechanism would mean the country would not have to bow down to foreign lenders.
Tunisian Finance Minister Siham Nemsieh warned that failure to repay the loans would lead to the “bankruptcy of the state”.
Meanwhile, Tunisia’s parliament on Thursday announced it had approved an agreement for the country to obtain a loan worth half a billion dollars from the African Export-Import Bank.
The deal was approved with 126 votes in favour out of 154.
In a speech during the session, Nemsieh said borrowing had been made inevitable due to external factors including the COVID-19 pandemic and the war in Ukraine.
Tunisia’s debt reached about $37bn at the end of 2022, or 79.9 percent of gross domestic product, according to figures presented by the ministry during the session.
The poorest have been hit the hardest by soaring inflation and the worldwide surge in food prices.
The United Nation’s financial agency has called for legislation to restructure more than 100 state-owned firms, which hold monopolies over many parts of the economy and in many cases, are heavily indebted.
Tunisia is enduring a financial crisis marked by chronic shortages of basic food products, while political tensions have run high since Saied launched a sweeping power grab in July 2021.
In May, inflation reached about 10.01 percent, while unemployment rose in the first quarter of this year to 16.1 percent, compared with 15.2 percent in the fourth quarter of 2022, according to official figures.
Tunisians have endured a decade of economic stagnation since the revolt that overthrew longtime ruler Zine El Abidine Ben Ali in early 2011.
Two previous IMF loan deals, for $1.7bn in 2013 and $2.8bn in 2016, have done little to fix the country’s public finances.