Tunisia says debt rescheduling "out of question"

Reuters News
Posted: Apr 16, 2011 12:19 PM
Tunisia says debt rescheduling "out of question"

By Manuela Badawy

WASHINGTON (Reuters) - Tunisian Finance Minister Jalloul Ayed said on Saturday that rescheduling his country's debt was "out of the question."

"We can honor our debt this year and in the future," Ayed told Reuters on the sidelines of the International Monetary Fund spring meeting.

Ayed, in an interview with Reuters Insider, also said he hoped Tunisia's budget deficit would not exceed 5 percent of gross domestic product in 2011, and the government would require $1.3 billion to address its short-term budget financing needs.

Tunisia expects growth of 1 percent to 1.5 percent "at best" this year, he said, and it needs $4 billion in foreign loans to help it recover from the aftermath of the revolt that ousted President Zine Al-Abidine Ben Ali in January after 23 years of autocratic rule.

Anti-government protests in Tunisia fueled by soaring prices, unemployment and repression have crippled the economy. Ayed said he is working with the World Bank on $500 million in budget support, which could leverage an additional $700 million from other donors.

"It is the first time that Tunisia will get such a loan from the World Bank and from other institutions," Ayed told Reuters.

Unemployment is a critical issue in Tunisia, he said, with 50 percent of the population under the age of 30 and 150,000 graduates entering the labor market every year, in addition to the 400,000 already looking for jobs.

The minister said the government has created a program called "Amal," or Hope, that would give around $130 a month to recent graduates as "pocket money" to use to seek employment opportunities.

The interim government has also launched programs of microfinance, private equity -- on a small scale -- and the reinforcement of banking to small and medium enterprises in order to stimulate entrepreneurship, he said.

Tunisia will hold an election on July 24 to choose a constituent assembly that will rewrite the constitution and chart the country's transition.

(Reporting by Manuela Badawy; Editing by Leslie Adler)