World bank lends Tunisia 500 million dollars for economic reforms

World bank lends Tunisia 500 million dollars for economic reforms

The World Bank has approved a 500 million dollar loan for Tunisia to help finance economic reforms and face the consequences of two big militant attacks targeting its tourism industry.

The North African state has mostly completed its democratic transition since the 2011 uprising that ousted Zine El Abidine Ben Ali. But international lenders want to see more economic reforms to help reduce the deficit and high public spending.

The bank said on Friday the operation would aid restructuring of state banks and administration as a way to help economic growth.

Last month Tunisia injected 867 million dinars ($440 million) into state-owned banks Société Tunisienne de Banque and Banque de l’Habitat, which IMF chief Christine Lagarde said would help the lenders out of a difficult financial situation.

Tunisia will start negotiations with the International Monetary Fund over a new credit programme likely to be worth at least $1.7 billion, its central bank chief said last month.

In March, Islamist gunmen killed 21 tourists in an attack at the Bardo Museum in Tunis, and 38 foreigners were killed in an assault on a Sousse beach hotel in June. Islamic State claimed responsibility for both attacks.

The attacks have hit its tourism industry, which accounts for about 7 percent of GDP and is a major source of foreign currency and employment, while strikes and protests have disrupted phosphate exports.

“We have accelerated the pace of our program to support Tunisia to face the economic shocks that followed the terrorist attacks in the Bardo and Sousse, and to strengthen support also the urgent task of protecting the achievements in the process of political transition.”, the bank added in statement.

Tunisia expects a budget deficit of 5 percent of gross domestic product in 2015, less than 5.8 percent last year.