April 1, 2011 / 3:12 PM / in 8 years

UPDATE 2-Tunisia sees 2011 economic growth below 1 pct

* Tunisia needs $4 bln in foreign loans in 2011 -finmin

* January revolution hit tourism revenues

(Adds more quotes, background)

By Tarek Amara

TUNIS, April 1 (Reuters) - Tunisia expects little growth in its economy this year and needs $4 billion in foreign loans to help it recover from the aftermath of a revolt that toppled its president, its finance minister said on Friday.

Speaking at a news conference, Finance Minister Jalloul Ayed said foreign investments were seen declining by 1 billion Tunisian dinars ($720 million).

“Growth for the whole of 2011 is forecast between 0 and 1 percent,” Ayed said.

“The current economic situation is very difficult with falling tourism revenues, exports and investments.”

President Zine Al-Abidine Ben Ali was toppled by mass protests on Jan. 14 after 23 years of autocratic rule and fled to Saudi Arabia. Interim authorities have struggled to restore stability in the North African country, but last month laid out a plan for a transition to democracy.

Unlike neighbours Algeria and Libya, Tunisia does not sit atop vast oil and gas reserves and relies heavily on tourism.

It does, however, have a relatively diversified economy and economists say it has the potential to move further up the value chain with the right mix of policies and commitment to long-term investment. Unemployment is around 14 percent.

“Tunisia needs foreign loans of $4 billion for 2011,” Ayed said. He said Tunisia’s debts to banks and foreign countries totalled nearly 16 billion dinars but that it would not seek a revision of these. “Tunisia will not ask for its foreign debts to be revised to avoid risks of foreign intervention in own political decisions,” he said.

Tunisia’s central bank said on Wednesday it had cut bank reserve requirements by 5 percentage points to boost liquidity. [ID:LDE72T2BU]

Ayed said the 2011 budget would be adopted at the end of May. He said some changes were being discussed, and that the government would increase financing for regional development by 255 million dinars. “Some major projects may be updated or cancelled,” he said, without giving details.

Ayed also said 20,000 jobs would be created in the public sector and another 20,000 in the private sector this year.

Ben Ali’s government had last year forecast growth of 5.4 percent for 2011 and the creation of some 80,000 jobs.

On a visit to Tunisia this week, EU Enlargement Commissioner Stefan Fule said the bloc was ready to double funds allocated to Tunisia. “The European Union is allocating part of the 160-million euro budget to Tunisia for 2012-2013,” Tunisia’s state TAP agency quoted him as saying.

“This amount will be doubled as soon as Tunisia has held free and fair elections for a constituent assembly ... and formed a democratically elected government.”

Tunisia will hold an election on July 24 to choose a constituent assembly that will rewrite the constitution and chart the country’s transition. [ID:nLDE7222FQ]

Ayed said the government would also provide “financial aid” to Tunisians who had fled the violence in neighbouring Libya. (Writing by Marie-Louise Gumuchian; Editing by Ruth Pitchford)

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