IMF urges Tunisia to move on reforms and curb deficit

TUNIS (Reuters) - Tunisia needs to speed up reforms to curb its deficit, the International Monetary Fund said on Tuesday, as the Tunisian government grapples with political upheaval and a "wait-and-see" attitude among investors.

The IMF did not mention its $1.7 billion loan to Tunisia. The government had expected it to announce payment of the second installment of the loan.

Tunisia's government and opposition have been wrangling for months over a transition to a caretaker administration, which would govern until elections are held next year.

"Immediate and urgent efforts are required to control budget and external deficits, reduce banking sector vulnerabilities, and generate more rapid and inclusive growth that can absorb unemployment," IMF mission chief Amine Mati said.

The IMF said Tunisia's economy is expected to grow 2.7 percent this year and record a deficit at 8.2 percent. The government had forecast 3 percent growth and a deficit of 6.8 percent.

Only $150 million of the $1.7 billion loan agreed to in June has been transferred so far. Finance Minister Elyess Fakhfakh said last month the IMF would disperse $500 million in December.

Other lenders are concerned about the slow pace of economic reforms in Tunisia. The government said the African Development Bank, or AFDB, had cancelled a loan for 500 million dinars, around $300 million, because of instability.

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