IMF: Sound policies yield encouraging outlook for Tunisian economy

WASHINGTON, June 23 (Xinhua) -- The International Monetary Fund (IMF) issued a statement on Tunisia's annual economic review Monday showing accelerated growth, a stable macroeconomic position and a favorable medium-term economic outlook benefiting from good economic management.

The statement was issued by an IMF mission focusing on Tunisian economic policies and medium-term economic outlook during a two-week visit to the country starting from May 27.

The mission was reported to have had wide-ranging discussions with Tunisian officials and representatives from banking and business sectors.

The statement says Tunisia recorded an excellent economic performance in 2007, with real GDP growth accelerated to 6.3 percent, contributing to lower unemployment. Inflation dropped to 3.1 percent last year owing to prudent monetary policy.

The statistics released also showed the fiscal deficit met the target of 3 percent of GDP, as well as a mildly reduced public debt of 50.9 percent of GDP and nonperforming loans of 17.3 percent to total loans ratio. The current account deficit, on the contrary, grew from 2 percent of GDP to 2.6 percent due to a decline in terms of trade.

The outlook for Tunisia's economy remains encouraging with real GDP growth in 2008 expected to be 5.5 percent despite 5 percent inflation predicted due to high food and fuel prices.

The statement gives credit to significant improvement in the business climate in Tunisia and its further integration into the regional and global economy, while it suggests structural reforms, additional tightening of monetary policy and a more flexible exchange rate to combat the major challenge of inflation.

It says reform of the subsidy system should be continued and an energy conservation policy should be implemented.

Mega-projects that support growth should be incorporated into the medium-term macroeconomic framework for better risk management.

The Executive Board of the IMF will discuss the review and conclude with a report in August this year.