Tunisia is close to securing significant multilateral funding and will launch two stimulus funds in 2012 that should enable it to navigate a “difficult year” without resorting to international market borrowing, finance minister Jaloul Ayed said yesterday.
Ayed recently met key players in the so-called Deauville Partnership – under which the G8 nations agreed to put up $38 billion for Tunisia, Egypt, Morocco, and Jordan over the next two years – in an effort to “maintain momentum” and accelerate flows, and said that talks are progressing well.
“We [don’t] expect the money immediately, but we walked away from [the most recent meeting in] Marseille with commitments and a much better idea of how that will be distributed,” Ayed told Emerging Markets in an interview.
“We have now started specific talks with partners who appreciate the credibility the interim government has gained over the past few months,” Ayed said.
The World Bank and other multilaterals are discussing budget support, needed because “we expect to go through a hump, because 2012 is expected to be a difficult year as the political transition continues, and we will continue to avoid borrowing on the international capital markets”, he said. The downgrade of Tunisia’s sovereign risk rating is a factor, Ayed acknowledged.
Ayed’s new Jasmine Plan, a copy of which has been seen by Emerging Markets, sets out a wide-ranging financial reform and investment creation programme.
“We need to put the facilities in place that create investment and jobs, and we need to spend whatever it takes to do it,” Ayed said.
According to the Jasmine Plan, the interim government intends to make two new investment vehicles operational by the end of 2012, “to speed up the investment process”.
The new Generational Investment Fund (“Ajyal Fund”) is intended to stimulate private investment – starting with a massive $2 billion of seed capital from government, building to $5 billion within three years, Ayed revealed. He added that the fund could eventually generate investments in excess of $30 billion.
“We must do this to get investment going now, using the best people, the best consultants”, he said.
A second fund, the Caisse de Depot et de Consignation (CDC), will be mainly engaged in funding large infrastructure projects and SMEs.
The Libyan revolution should also give the Tunisian economy a bounce, Ayed said. “Libya will have a very important impact on Tunisia.”
Tunisia expects to revert to its traditional position as a platform for international companies’ operations and investment going into Libya.
Even more important for a country whose old order was overturned by a disaffected youth looking for job opportunities, Tunis forecasts big demand for Tunisian workers in Libya, including engineers and other graduates.
“This will make a big contribution towards tackling our unemployment situation. We believe Libya could take 200,000-250,000 Tunisian workers in the next couple of years”, Ayed said.
Ayed added that private investment from the Gulf could play a critical role in the country’s economy. More Arab funds were coming, he told Emerging Markets, but most of this will come from private investors in Kuwait, Qatar and the UAE, rather than Gulf governments.