Tunisia to boost local banks with IMF money

By Marc Castro

Jun 17, 2013 02:42 PM EDT

According to communication provided by the Tunisian government, it said it would be spending over a billion dollars in order to recapitalize state owned banks. This comes as the government struggles to keep the economy at an even keel after its revolution in 2011. 

The said communication was sent to the International Monetary Fund who had recently agreed to provide Tunisia a loan facility in the amount of US$1.74 billion in the next two years. 

According to the government, which published the letter last Monday, "A priority of the government will be to implement a series of measures to mitigate banks' weaknesses that were accumulated during years of favoritism, inadequate standards and weak banking supervision."

The reason for such plan is because many businesses have decried the difficulty of obtaining loans to fund businesses in light of the recent political crisis that had come post-revolution. Once the banking system has become stable, this would boost the economy in the long run.

Alongside the loan facility is the mobilization of "all necessary resources" to recapitalize the banks in the next two years. It is projected that the whole program would cost about US$1.1 billion.

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