Saudi Arabia to lend Tunisia $500 million, finance projects

Tunisia has struggled economically and is hungry for foreign funding.
Thursday 29/11/2018
Tunisian President Beji Caid Essebsi (C-R) and members of his government meet with Saudi Arabia's Crown Prince Mohammed bin Salman (L-C) and his delegation in Carthage on November 27. (Tunisian Presidency via AFP)
Tunisian President Beji Caid Essebsi (C-R) and members of his government meet with Saudi Arabia's Crown Prince Mohammed bin Salman (L-C) and his delegation in Carthage on November 27. (Tunisian Presidency)

TUNIS – Saudi Arabia will lend Tunisia $500 million at a favourable interest rate and will finance two projects worth $140 million, two sources told Reuters on Wednesday, a day after a visit from Saudi crown prince Mohammed bin Salman to Tunis.

The kingdom’s de facto ruler received lavish receptions earlier in his tour in visits to Bahrain, the United Arab Emirates and Egypt. Some Tunisians, however, took to the streets to protest against the visit of the crown prince. 

The crown prince was received by President Beji Caid Essebsi, who awarded him the republic’s medal, the highest official award. Tunisia has struggled economically and is hungry for foreign funding.

“Tunisia will announce in a few days important deals with Saudi, including a loan with low interest rate, agreements on investment and other important details,” Nourredine Ben Ticha, an advisor to the president, told state television.

Two Tunisian sources – an official and a source close to the discussions between Prince Mohammed and Caid Essebsi – told Reuters that the loan would be worth $500 million. They said that the Saudi Development Fund will also finance two projects worth about $140 million, but did not give more details.

Tunisia is struggling to cut its budget deficit, stabilise falling foreign currency reserves and manage expectations of international lenders demanding reforms such as trimming the public wage bill.

Tunisia’s economy has been in turmoil since former President Zine al-Abidine Ben Ali was toppled in a 2011 uprising sparked by anger at unemployment, poverty and record levels of inflation.

Under pressure from the International Monetary Fund, Prime Minister Youssef Chahed has aimed to cut the budget deficit to about 4.9 percent of GDP this year from 6.2 percent last year.

The crown prince told Tunisian state television that Saudi Arabia has long had good relations with Tunisia: “I cannot come to North Africa without visiting Tunisia…Tunisia’s president is like my father.” 

(AW and Reuters)