TUNIS, Tunisia (AP) — The World Bank announced Friday a $1.2 billion package to support Tunisia's economic reforms and stumbling economy.
The much needed cash came on the heels of the announcement a month ago by the International Monetary Fund that a long-delayed $500 million in funding had been released following the passing of a new post-revolutionary constitution.
The World Bank program involves $750 million to support government reforms to promote growth and create employment. Another $300 million is earmarked for decentralization projects to aid the impoverished interior.
A line of credit for $100 million has been created for banks to support small and medium enterprises. Another $50 million will be to promote exports.
"The financial support of the bank will be to move forward the Tunisian reform program during this final year of the democratic transition," said World Bank Vice President Inger Andersen to state television. "The financing must go to those who need it, not the state."
She added that the bank believed the new constitution would provide the needed base for further economic reforms.
A popular uprising calling for greater freedoms and more jobs overthrew Tunisian dictator Zine El Abidine Ben Ali three years ago, sparking similar movements across the Arab region. But in the restive aftermath, tourists fled, factories were shuttered by strikes, investment evaporated and inflation soared.
The funds are desperately needed to plug yawning holes in the budget in the face of diminished revenues and the soaring costs of subsidies and salaries. In 2013, Tunisia's budget deficit rose to a prohibitive 8 percent of GDP.
While growth rebounded somewhat in 2013 to 2.7 percent, it's not nearly enough to tackle the country's stubborn 17 percent unemployment rate and shore up the currency. Inflation for 2013 was nearly 6 percent.