Tunisia hopes to reach agreement with IMF by end of October

Tunisia hopes to reach an agreement with the International Monetary Fund by the end of October, the government's spokesperson said on Friday, after a wage deal agreed with unions was seen as a key step towards getting IMF support.

The government and the powerful UGTT union on Thursday signed a deal to boost public sector wages by 5%, a step that may ease social tensions. But they did not announce any further agreement on reforms needed for an IMF bailout.

"The Tunisian negotiating team was in contact yesterday with (the) IMF regarding the last terms of the agreement with the Fund," Nasreddine Nsibi, the government spokesperson, said.

"We seek to reach a deal with the IMF before the end of October, which would make Tunisia able to fulfil all its commitments, including providing foods and energy products, paying wages and debt service," he added.

Fitch Ratings said on Friday that Tunisia’s wage agreement raises the likelihood of an IMF deal.

Tunisian officials have said that Tunis aims for a $3 billion loan.

The IMF has signalled it will not move forward with a bailout sought by Tunis unless the government brings on board the UGTT, which says it has more than a million members and has previously shut down the economy in strikes.

Tunisia is struggling to revive its public finances as discontent grows over inflation running at nearly 9% and a shortage of many food items in stores because the country can't afford to pay for some imports.

The IMF and major foreign donors want Tunisia to push ahead with cuts in subsidies and the restructuring of state-owned companies as well as steps to bring the public sector wage bill under control.

(Reuters)