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Tunisia Priority, the fight against inflation (IMF)

A mission of the services of the International Monetary Fund, the Institution issued the following communiqué: "As part of the follow-up to the recent findings of the Fifth Review, we have conducted fruitful exchanges with the authorities on the latest economic developments and prospects for Tunisia. A firm implementation of monetary and fiscal policies in the first half of 2019 reduced inflation to 6.8% against inflation of 7.7% a year earlier, to reduce the refinancing granted to end of June, and laid the foundation for a reduction in the budget deficit for the second year in a row. "At the same time, the risks potentially affecting the economic outlook for 2019 have increased since the Fifth Review. Growth will most likely be around 2% at most, reflecting in particular the disappointing performance of the industry in recent months. In addition, the recent appreciation of the dinar, the rise in oil prices, and slower growth among Tunisia's main economic partners are likely to affect current payments, and despite the more favorable tourist season than planned. These trends make it even more imperative to pursue, with determination, the implementation of macroeconomic policies already under way. "Achieving the fiscal deficit target of 3.9 percent of GDP is crucial to limit the accumulation of public debt, which has already reached 77 percent of GDP by the end of 2018. This will make it even more strong performance in terms of tax revenue and collection of arrears, as well as additional measures to limit operating expenses, including through further moderation of the wage bill and energy subsidies. The IMF staff mission also supports ongoing efforts by the Tunisian authorities to strengthen the social safety net for the most disadvantaged households. Monetary policy should remain firmly focused on reducing inflation, which erodes the purchasing power of Tunisians, and exchange rate flexibility to improve current payments and reserves.

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