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IMF says Tunisia should adjust its 'development model'

Tunisia's economic growth slowed to 0.8 percent last year from 2.3 percent in 2014
Tunisia recently marked 5 years since the uprising, but has failed to redress the economy (AFP)

Tunisia should adjust its development model to counter economic slowdown and build "inclusive growth", the International Monetary Fund's country representative said, ahead of an expected line of IMF credit.

The authorities have failed to redress the economy since the uprising five years ago that deposed longtime President Zine El Abidine Ben Ali.

Tunisia's economic growth slowed to 0.8 percent last year from 2.3 percent in 2014, and unemployment nationwide stands at 15 percent.

In January, a wave of protests spread to several cities including Tunis in some of the worst social unrest since the 2011 revolt.

"This trend needs to be reversed... The idea would be to build the base for inclusive growth and revise Tunisia's development model," Robert Blotevogel told AFP.

An IMF delegation is in Tunisia to discuss a new aid package at least equal to a $1.7bn credit line granted in 2013.

The new IMF programme will follow on from the two-year deal that was agreed in 2013 and extended last year by seven months to buy time for Tunisia to put banking and fiscal reforms in place, Reuters reported.

Under the programme, Tunisia also agreed to keep its budget deficit under control and make the foreign exchange market more flexible, Reuters said.

Blotevogel said the government and the IMF had agreed on "the goal for big reforms and the diagnosis" of the situation, and were now "mostly focusing on the timeline for implementation".

The IMF's board is expected to approve the new line of credit -- to be over four years at the request of Tunis -- on April 22, he said.

"Expected growth for 2016 does not correspond to the aspirations of the Tunisian people. It will not be strong enough to reduce unemployment", he said.

He said he expected 2016 to be a "stabilisation year", explaining that the agriculture sector was expected to perform less well than in 2015.

Olive oil and date exports gave the economy a boost in 2015, the finance minister said in October.

In tourism, "initial signs... do not lead to believe that there will be any great recovery" this year, Blotevogel added.

Tunisia lost more than a third of its vital tourism revenues in 2015, after attacks claimed by the Islamic State group that killed 59 foreign tourists.

Blotevogel said Tunisia should adjust its budget to relaunch the economy and ensure growth can "reach the most vulnerable and also the disadvantaged regions".

"We are facing a problem in the composition of the budget," he said, adding that the civil service was "a great drain on state expenses" and "a great challenge for Tunisia's economy".

Tunisia's last line of credit in 2013 came as support for the political transition after the 2011 uprising.

The package was implemented in "very difficult conditions", Blotevogel said, citing slow growth in the EU, Tunisia's largest trading partner, and the crisis in neighbouring Libya.

The democratic transition "took longer than expected" and was "accompanied by social unrest... then by the security aspect whose importance increased with the terrorist attacks in 2015".

An IS-claimed attack on the National Bardo Museum in Tunis in March last year killed 21 tourists and a policeman, while another killed 38 tourists at a beach resort near Sousse in July.

A suicide bombing on a bus in Tunis in November, also claimed by IS, killed 12 presidential guards.

Tunisia showed a "certain resilience because the greater macro-economic balances were maintained," Blotevogel said.

The authorities also "made considerable progress in several fields including the financial sector" with the restructuring of public banks.

But the country still faces "a number of challenges, weaknesses", he said.