News Brief No. 02/108

News Brief: IMF Managing Director Horst Köhler's Remarks in Tunisia

October 23, 2002

International Monetary Fund (IMF) Managing Director Horst Köhler, made the following statement on October 19, 2002, at the conclusion of his visit to Tunisia:

"I have had very fruitful meetings with President Ben Ali and the Tunisian authorities and I would like to thank them for their warm welcome on this, my first, visit to Tunisia. I congratulated His Excellency the President, Prime Minister Ghannouchi, Governor Daouas, Finance Minister Baccar, and Minister of Development and International Cooperation Jouini for the sustained economic growth and a remarkable improvement in social conditions, which are the result of the efforts of the Tunisian people.

"Tunisia has also benefited from its smooth integration into the global economy by opening its economy and achieving export-led growth while maintaining macroeconomic stability. These outward-oriented policies have been underpinned by a long-term strategy that has included investing successfully in education, and developing infrastructure and institutions. As a result, Tunisia's economy has proved resilient in the face of a downturn in global conditions and has maintained its good standing in the international capital markets. Investors, it appears, do differentiate between countries.

"Tunisia's record reflects the importance of national ownership of policies for ensuring the success of reform efforts. I am pleased to say that the IMF has supported these efforts with technical assistance and continuous policy advice. This close dialogue is a reflection of the excellent relations between Tunisia and the IMF.

"My discussions have focused on the challenges Tunisia faces in preserving its achievements in a difficult international environment, and in the face of a fourth year of drought that has brought agricultural production to a record low. Fiscal and monetary policies need to maintain a cautious stance to keep growth of domestic demand in line with production and to limit the impact of these shocks on the external position.

"Macroeconomic policies alone will not suffice, and Tunisia needs to intensify structural reform. Among these reforms I would like to stress the need to proceed further with external trade liberalization both in the context of the Association Agreement with the EU, and, on a multilateral basis, with reductions of tariffs on products from non-EU countries. My visit to the Maghreb has, moreover, convinced me that Tunisia, and its neighbors, would greatly benefit from increased economic integration with the Maghreb, which constitutes a large and largely untapped market.

"For Tunisia, the momentum of reform needs to be maintained, including through privatization, liberalization of the telecom sector, and strengthening of the financial sector with support from the World Bank and others. Concerning financial sector reform—an area where the IMF has a direct interest—I am encouraged by the good progress made by the authorities in implementing the recommendations of the recent Financial Sector Assessment Program, conducted in collaboration with both the World Bank and the IMF. These efforts will further strengthen the financial system.

"Allow me to end by commending Tunisia's support for transparency in economic policy making. The Tunisian authorities have systematically published the concluding statements of IMF missions visiting Tunisia and all Fund documents on Tunisia. Tunisia is the only country in the region that has subscribed to the IMF Special Data Dissemination Standard which reflects international best practice in the area of economic and financial statistics. I have also been pleased to learn that the Central Bank of Tunisia is publishing the conclusions of its executive board on monetary policy. This initiative will contribute to clarify and explain the macroeconomic policy outlook, a crucial factor influencing the behavior of both domestic and foreign investors.

"The IMF stands ready to assist Tunisia in advancing its reform agenda. We are confident that the authorities will continue to meet these challenges and we wish you every success."