Tunisia is another example of the absurd @IMF conditions, repeated over and over again. Four years since the stand by agreement
- manufacturing collapsed
- investment collapsed
- manufacturing collapsed
- investment collapsed
Growth driven by private consumption, and met by growing imports, w exports contracting, large current account deficits to 11% GDP
IMF pushed for devaluation of dinar in 2016 to
1. Preserve foreign exchange reserves
2. Reduce CA deficits.
The opposite happened, as anyone familiar w developing countries would have told them.
1. Preserve foreign exchange reserves
2. Reduce CA deficits.
The opposite happened, as anyone familiar w developing countries would have told them.
Devaluation did move something up, inflation. In response central bank raised interest rates.
Colonial legacies stand in the way of managed exchange rate regimes or industrial policies: non-resident companies are allowed to not repatriate export earnings, in an economy hemoraging FX reserves
These non-resident companies account for roughly 70% of exports! As one participant put it, Tunisia is in a shadow CFA franc neocolonial arrangement that is complicating tremendously an already difficult macro picture.
Why, one wonders, didn't @Lagarde and IMF demand that this neocolonial monetary arrangement be eliminated to put Tunisia's balance of payments on firmer foundations? cc @MiriamBrett @Kentikelenis
Incidentally, central bank of Tunisia participant described IMF insistence on devaluation as 'ommission' of structural conditions of economy, as described here
