The World Bank has approved a $120 million loan for Tunisia to fund its ‘Support to Small and Medium Enterprises for Economic Recovery’ project.

Development Diaries reports that the project aims to address the primary long-term liquidity constraints faced by small and medium Tunisian enterprises as a result of the impact of the Covid-19 pandemic and war in Ukraine.

In 2020, the Tunisian economy witnessed an 8.8 percent Gross Domestic Product (GDP) contraction mainly due to the spring lockdown, the trade openness of the Tunisian economy, and its exposure to global value chains and tourism shocks.

Also, the war in Ukraine has severely impacted Tunisia as it relies on Ukraine and Russia for 56 percent of its annual wheat imports.

‘SMEs play a key role in the Tunisian economy. The Covid-19 pandemic and the war in Ukraine have caused macroeconomic imbalances in Tunisia, which have exacerbated challenges faced by SMEs and weakened their performance and financial health’, World Bank Country Manager for Tunisia, Alexandre Arrobbio, said in a statement.

‘Through this project and other financial sector support programmes, the World Bank, together with our partners, are pursuing support for the Tunisian government’s recovery plan.

‘This plan includes pivotal financial sector reforms that the authorities are undertaking to strengthen financial sector regulation and supervision, further develop financial infrastructure, and promote broader financial inclusion’.

The World Bank said it consulted with a broad range of stakeholders during the preparation of this project, and that they endorsed the lines of credit.

Source: World Bank

Photo source: Dennis Jarvis