EU may still loan Tunisia $1 billion if it secures IMF support

BRUSSELS (Reuters) – The European Union could still lend Tunisia’s battered economy 900 million euros ($1.0 billion), an EU official said on Monday, but further talks will be in the third quarter and depend on a deal with the International Monetary Fund (IMF).

Talks on a $1.9 billion IMF loan have been stalled since October after President Kais Saied rejected terms including subsidy cuts and a reduction in the public wage bill.

“Macro assistance is still on the table but this needs to meet IMF conditions,” said the EU official with knowledge of the negotiations.

“Tunisia says it may not need an IMF agreement so we will see in Q3.”

Tunisia is on the edge of a major debt crisis and is suffering from shortages of essential goods. Most debt is internal but there are foreign loan repayments due later this year, and credit ratings agencies have said Tunisia may default.

On Sunday, the European Commission chief Ursula von der Leyen said the bloc will allocate 100 million euros ($112.36 million) to Tunisia as part of a “strategic partnership” deal to combat human trafficking and promote investment and trade.

($1 = 0.8900 euros)

(This story has been corrected to fix the spelling of EU Commission head’s name in paragraph 5)

(Reporting by Julia Payne; Editing by Andrew Cawthorne)