Tunisia to raise fuel prices, hold off public wages increases

A gas station attendant pumps fuel into a customer’s car at a gas station in Tunis, Tunisia. (Reuters)
Updated 02 June 2018
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Tunisia to raise fuel prices, hold off public wages increases

TUNIS: Tunisia will raise fuel prices in the coming days but hold off increasing public wages this year to meet terms of the International Monetary Fund for its next loan tranche, a government official and diplomatic sources told Reuters.
Tunisia has dropped into a deep economic slump following the overthrow in 2011 of autocratic leader Zine El-Abidine Ben Ali.
Although its successful democratic transition since then contrasts with other “Arab Spring” countries, nine governments have failed to cut the budget deficit and revive an economy hit by a lack of investment and militant attacks on tourists.
Loan talks have been complicated by a row inside the ruling coalition of secularists and moderate Islamists — over the extent of reforms and a possible cabinet reshuffle — that coincided with a visit this week from an IMF delegation.
The new austerity measures are likely to meet resistance from the powerful labor union UGTT and people tired of austerity, galloping inflation and political instability.
Tunisia agreed with the IMF in December 2016 on a loan program worth around $2.8 billion to overhaul its ailing economy with steps to cut chronic deficits and trim bloated public services, but progress has been slow.
The IMF delegation visited Tunisia this week to review with officials the next tranche worth around $250 million which, if approved, would bring total payments since 2016 to $1.2 billion.
The government official said fuel prices would rise by 0.070 dinar ($0.027) a liter in the coming days, the third hike this year but less than the 0.100 dinar the IMF had asked for, as the government has whittled down subsidies on imported fuel.
For 2018, Tunisia had budgeted 1.5 billion dinars in subsidies but with a recent rise in global oil prices it would have to spend 4 billion to avoid a rise in pump prices, he said.
“The IMF is demanding that the (fuel price) increase in all 2018 be about 0.500 dinar, but we want the adjustment to be acceptable to curb inflation,” the official said.
To appease donors, Tunisia also wants to delay a public salary increase considered for 2018 until next year though this needs to be negotiated with the labor unions, he added.
The North African country also plans to sell Eurobonds worth $1 billion over the next two weeks to help fund the budget, the official said.
IMPATIENCE
Western governments, worried about high unemployment driving Tunisians into illegal migration or militancy, have strongly backed Tunis during the post 2011-transition even without much evidence of progress on economic reforms.
But in a sign of increasing donor impatience, diplomats said, the United States abstained when the IMF voted to approve the most recent loan tranche.
The government has been trying to cut the public sector wage bill to 12.5 percent of GDP in 2020 from 15 percent — one of the world’s highest — by offering voluntary redundancies. But few have taken up the offer due to high unemployment.
The UGTT union, the political kingmaker in Tunis, has rejected plans to dismiss public servants and sell loss-making state firms.
To avoid layoffs the government increased taxes and duties at the start of the year, hitting banks and other sectors and triggering two weeks of riots.
On Tuesday Prime Minister Youssef Chahed said the president’s son had destroyed the ruling Nidaa Tounes party, of which Chahed is also a member.
The president’s son, Hafedh Caid Essebsi, who is the leader of Nidaa Tounes, had called for Chahed’s dismissal because of his government’s failure to revive the economy. But the moderate Islamist party Ennahda, Nidaa Tounes’ coalition partner, backed Chahed. ($1 = 2.5921 Tunisian dinars)


Daesh defeated, ‘caliphate’ eliminated: US-backed SDF

Updated 3 min 22 sec ago
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Daesh defeated, ‘caliphate’ eliminated: US-backed SDF

  • The victory marks the end of the militants’ self-declared “caliphate”
  • The SDF has been battling to capture Baghouz at the Iraqi border for weeks

BEIRUT: Daesh has been defeated at its final shred of territory of Baghouz in Syria, the US-backed Syrian Democratic Forces (SDF) said on Saturday, announcing the end of its self-declared “caliphate” that once spanned a third of Iraq and Syria.
The SDF declared the “total elimination of (the) so-called caliphate,” Mustafa Bali, head of the SDF media office, wrote on Twitter.
“Baghouz has been liberated. The military victory against Daesh has been accomplished,” he wrote.
The SDF has been battling to capture Baghouz at the Iraqi border for weeks.
“We renew our pledge to continue the war and to pursue their remnants until their complete elimination,” he wrote.
Though the defeat of Daesh at Baghouz ends the group’s grip over the extremist quasi-state straddling Syria and Iraq that it declared in 2014, it remains a threat.
Some of its fighters still hold out in Syria’s remote central desert and in Iraqi cities they have slipped into the shadows, staging sudden shootings or kidnappings and awaiting a chance to rise again.
The US believes the group’s leader, Abu Bakr Al-Baghdadi, is in Iraq. He stood at the pulpit of the great medieval mosque in Mosul in 2014 to declare himself caliph, sovereign over all Muslims.