Arab Monetary Fund grants $59m loan to Tunisia to ease Covid-19 economic impact

The country's economy is forecast to shrink up to 4.3% this year in the wake of the pandemic

An empty street in Tunisia's capital of Tunis following the closure of businesses due to the coronavirus pandemic. Tunisia's economy is projected to shrink 4.3 per cent in 2020. EPA

The Arab Monetary Fund (AMF) extended a new loan facility worth $59 million (Dh217m) to Tunisia to strengthen the country’s financial position in the wake of the coronavirus pandemic.

“The AMF follows closely the developments of the Tunisian economy and the challenges it faces due to the current circumstances and works through a fruitful partnership with the Tunisian government to help the country contain the different challenges in the most effective way,” the Abu Dhabi-based institution said in a statement on Wednesday.

The AMF also said it is considering providing a second loan to the North African country to help with reforms in the banking and finance sector.

The coronavirus pandemic has hit the global economy, which is set to slide into a deep recession this year. It has forced governments to close borders, enforce movement restrictions and shut all but essential businesses.

The pandemic has particularly hit tourism-reliant countries like Tunisia, which have had to close its borders to contain the virus. The North African country's economy is forecast to shrink up to 4.3 per cent this year, the steepest drop since its independence in 1956 due to the coronavirus pandemic, the International Monetary Fund said in April.

The AMF is granting loans to a number of countries in the Middle East and North Africa to help them overcome the economic fall out from the coronavirus pandemic. Last month, the organisation disbursed a $38m loan to Jordan to support the country's economic reforms. It also extended a loan facility worth $127m to Morocco.

“The AMF assistance in this regard comes as a support to the reform efforts of member countries and the measures they are taking to stimulate the economy and provide liquidity in order to contain the negative effects of the virus outbreak,” the organisation said.

The AMF also said it is currently studying financing requests from other member countries and is processing the requests through expeditious procedures.

Member countries of the AMF include the UAE, Bahrain, Saudi Arabia, Syria, Somalia, Iraq, Oman, Palestine, Kuwait, Lebanon, Libya, Jordan, Egypt, and others. The institution was founded in 1976.