EU sends €150 million in financial aid to Tunisia

The package is part of macroeconomic reforms agreed on in December

European Commission President Ursula von der Leyen said the aid package was 'a significant step forward' in the bloc’s partnership with Tunisia. EPA
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The EU has paid out a promised €150 million ($162 million) budgetary support package to Tunisia on Monday.

The funds are intended “to support Tunisia in stabilising its macroeconomic situation and its efforts to improve the management of its public finances and the business climate”, the EU Commission said.

The funding also aims to strengthen the government's capacity to ensure stable and inclusive growth amid a degrading socio-economic situation, the commission said.

The package is part of an economic reform agreement signed last December, as well as an agreement on a strategic and comprehensive partnership that was signed last July in the capital, Tunis.

EU Commission President Ursula von der Leyen said the aid package served as “a significant step forward” in the bloc’s partnership with its North African neighbour.

Oliver Varhelyi, the EU's neighbourhood and enlargement commissioner, said the budget support is in line with efforts by the Tunisian government to effectively manage its finances and “the positive steps it has taken to render the investment climate more favourable”.

Despite this, many Tunisians feel the country's economic reforms have fallen short, partially due to political instability and constant government reshuffles.

As part of its agreement, the EU promised Tunisia €900 million in financial aid based on a five-point programme which included economic reforms and stricter border control measures to curb the irregular migration influx towards Europe.

However, the EU Commission maintains that the country is showing enough economic recovery signs to qualify for its support.

“The EU-Tunisia MoU [Memorandum of Understanding] signed last year has started to bear fruit on all five pillars and its implementation continues within the framework of a positive joint dynamic,” Mr Varhelyi said.

The comprehensive agreement, based on a five-point programme, includes economic reforms and stricter border controls to curb the migrant influx in Europe.

However, a timetable for the disbursement of the entire sum has yet to be determined by the EU as it is bound by facts on the ground, namely progress in economic reforms and political understanding between the signatories of the deal.

The package also includes funding for renewable energy projects, railways and internet infrastructure.

The EU’s financial support for debt-laden Tunisia is considered vital to help it avoid further economic failure as a $1.9 billion bailout loan by the International Monetary Fund remains in limbo since 2022.

The North African country continues to grapple with an inflation rate as high as 7.8 per cent and a gross domestic product decline of 0.2 per cent in the fourth quarter of last year, according to its National Statistics Institute.

Updated: March 05, 2024, 11:30 AM