In order to rebuild Tunisia‘s devastated economy, restore state finances, and address a migratory issue, the European Union, EU, announced on Sunday that it may lend the country more than 1 billion euros ($1.07 billion), with the majority of funding depending on it approving economic reforms.
The invitation was made public by European Commission President Ursula von der Leyen, Dutch Prime Minister Mark Rutte, and Italian Prime Minister Giorgia Meloni, who is concerned about migration across the Mediterranean, while they were visiting Tunisia.
Their efforts are part of a last-ditch effort by key donors to persuade President Kais Saied to accept the terms of a $1.9 billion International Monetary Fund (IMF) bailout, which is being driven by growing fears about Tunisia’s stability in Europe.
Saied has so far resisted the initial suggestions made by his own government to reduce subsidies and reorganise state-owned businesses that are losing money, claiming that doing so runs the risk of sparking a mass uprising.
Tunisian state media cited Saied as saying he had “confirmed” during the meeting with the European leaders that “solutions cannot be in the form of diktats and the IMF should review its prescriptions”.
Donors claim that time is running out for Tunisia to accept the loan and prevent the collapse of its public finances, but they are hesitant to do so in the absence of fully costed changes that could enable Tunisia to pay back its debts.
It could take months longer to reach any modified IMF agreement.
According to a fact sheet issued by the EU, once Tunisia completes the IMF program, for which a preliminary agreement was reached in October, the organization will give the country up to 900 million euros to assist its macro-finances.
The EU could also provide 150 million euros in budget support this year “in the context of a reform agenda”, the factsheet said.
Von der Leyen added that the EU would also this year provide Tunisia with 100 million euros for border management, search and rescue, anti-smuggling operations and returns “rooted in respect for human rights”.
Tunisia’s presidency said in a statement that it was creating a partnership with the EU to combat illegal migration. But Saied also said: “The solution that some secretly call for is to settle migrants in exchange for money, a solution that is neither humane nor acceptable”.
Meloni, who has pressed for the IMF to relax conditions for its loan programme, said there was “an important window of opportunity” to finalise the aid agreement before the European Council at the end of June.
Von der Leyen said Europe was helping Tunisia’s economy in other ways, including a 150 million-euro digital cable link to Europe and a 300 million-euro renewable energy power export project.
She said the EU would also expand opportunities for young Tunisians to study, work and train in the EU to help them develop skills that could be used to boost the Tunisian economy.