Tunisia stalled IMF loan lies in hands of unwilling president.

Talks to save Tunisia with the International Monetary Fund seem to have stalled for several months, and there is no indication that President Kais Saied is ready to agree to the steps needed to reach an agreement and help the country avoid a crisis.

Tunisia reached a working-level agreement with the fund in September on a $1.9 billion loan, but it has missed key commitments and donors believe the government’s funds are being lost, beyond the figures the deal calculated.

Without credit, Tunisia faces a general payment crisis. Most of the debt is domestic, but there is an external debt repayment later this year, and credit rating agencies have said Tunisia can pay.

IMF chief Kristalina Georgieva said last month that Tunisia had made good progress and that the board would review the plan “very soon”. An IMF spokesman said the board’s date would be set once the authorities “have met the terms of the deal”.

A Tunisian official said “things may not be going fast, but they are moving fast”, adding that the government expected progress “probably within a few weeks”.

Tunisia has backtracked on plans to cut oil subsidies, failed to enact promised legislation on state-owned companies and the powerful coalition opposes key reforms sought by the IMF.

More importantly, Saied has not publicly approved the deal or promised to sign it if it is approved, leaving donors worried that he may reject the loan, roll back reforms after the money arrives or blame them for any economic pain.

If Tunisia takes too long to finalize the agreement, the fund may decide that the figures on which it is based are false and negotiations will have to start over. It is not known when this stage will arrive.

The government is already struggling to pay for essential imports and there have been frequent shortages of subsidized sugar, coffee, cooking oil, dairy products and medicine in recent months. Inflation is over 10%.

Without foreign aid, shortages may worsen and spread to other commodities such as oil, while the government may also struggle to pay government salaries.

Fewer foreign donors seem willing to lend money to Tunisia without the guarantee of an IMF deal, and a domestic money market may soon be available.

Other sources of funding – tapping into foreign currency reserves or printing money – would weaken the Tunisian dinar, exacerbating the government’s problems with imports and accelerating inflation.

The Central Bank has already warned against such measures.

While some foreign aid continues, with loans targeted by international financial institutions to support the purchase of food and fuel, this is not enough to finance the Tunisian budget.

Under the September deal, Tunisia was required to raise oil prices by 3-5% per month, donors said. It has not done so since November and although another increase is expected soon, it will need to be higher to fulfill the promise.

Although the government said last month that it had approved a law on government agencies seen as a precursor to reform efforts aimed at reducing the heavy financial burden they place on the government, the law was not formally enacted.

The delay appears to have fallen on President Saied, who assumed most of the power in 2021, shutting down parliament, appointing a new government and rushing in with orders.

He has shown little interest in economic policy except to blame Tunisia’s problems on corruption and has rejected calls from donors to gain social acceptance for painful reforms through deals with a coalition that is now fiercely opposed.

In addition to keeping donors, his style of austerity, repression of dissent, and rhetoric against immigrants and foreign interference gave them little reason to grant Tunisia any additional autonomy.

The World Bank has already suspended future work with Tunisia, and the IMF on Thursday said it was “concerned” by the latest development.

Saied’s broader remarks on aid meanwhile suggest that if the IMF and donors are hoping for his public endorsement of a deal that would require unpopular spending cuts, they may be out of luck.