Tunisia to start food and energy subsidy cuts next year

Tunisia will start next year gradual cuts in energy and food subsidies coupled with financial transfers to vulnerable families, the government said on Tuesday, announcing a key reform demanded by international lenders. Tunisia is in talks with the International Monetary Fund to agree on a $4 billion loan in return for an unpopular reform package to shore up its struggling public finances.

Tunisia will start next year gradual cuts in energy and food subsidies coupled with financial transfers to vulnerable families, the government said on Tuesday, announcing a key reform demanded by international lenders.

Tunisia is in talks with the International Monetary Fund to agree on a $4 billion loan in return for an unpopular reform package to shore up its struggling public finances. Energy Minister Naila Nouira told a news conference that, starting next year prices of gas for households will go up. Domestic fuel prices are set to keep rising until they reach market levels in three years, she said.

Budget spending on subsidies rose to more than 5 billion Tunisian dinars ($1.64 billion) from 3 billion dinars last year , Trade Minister Fadhila rahbi said. The government also aims to reduce the public wages bill by freezing the increases in public sector, a step rejected by powerful UGTT Union, which announced a national strike in state firms on June 16 to protest against the government’s economic policy. ($1 = 3.0432 Tunisian dinars)