EU Parliament approves EUR 500m loans to Tunisia
(STRASBOURG) - MEPs gave their backing Wednesday to a plan to lend Tunisia EUR 500 million on favourable terms, in order to help it reduce its external debt and consolidate its democratic mechanism.
To access the money, Tunisia must sign a memorandum of understanding with the EU Commission pledging structural reforms and sound management of public finances. Tunisia will also have to ensure effective democratic mechanisms, rule of law and respect for human rights, all of which are to be monitored by the EU.
Once this is done, Tunisia will then have the opportunity to take up the loans within a period of two and a half years.
Tunisia's economy has been in serious difficulty since the 2011 Arab Spring revolution. In 2015, it was hit by terrorist attacks that disrupted tourist flows and exacerbated its already weak fiscal and balance of payments position.
The EU has also acknowledged that Tunisia has received more than 1.8 million refugees from Libya - equivalent to almost 20 per cent of its population.
The country's growth forecast for 2016 is 0.5%, down from 3% in 2015. Unemployment rates are 20% for women, 28.6% for young university graduates and an overall average of 15%.
The EU did grant EUR 300 million financial aid in 2014. In August 2015, the Tunisian Government asked the EU to contribute EUR 500 million to a second assistance programme, supplementing loans from the International Monetary Fund (IMF).
On 1 June 2016, the Council also endorsed the decision to provide a maximum of EUR 500 million in macro-financial assistance to Tunisia.
The EU aid to Tunisia supplements $2.9 billion in International Monetary Fund aid to Tunisia.
Nevertheless, Tunisia's transition towards democracy was praised by Parliament rapporteur Marielle de Sarnez MEP: "Europe really needs to stand by its side now, and I ask the Commission to make this money available as quickly as possible, before the summer."
She added that "this macro-financial assistance is not a grant, it is only a loan which Tunisia will have to repay, even though its debt continues to rise." She invited the EU Commission to "start thinking" along the lines of France and Germany which have decided to convert part of Tunisia's debt into investment in Tunisia."