TUNIS – The World Bank announced Tuesday a $130 million loan to help Tunisia meet the cost of grain imports, the prices of which have skyrocketed since the Russian invasion of Ukraine.
The package aimed to “reduce the impact of war in Ukraine by financing essential soft wheat imports and providing emergency aid to cover barley imports for milk production”, the lender said.
It would also help buy “seeds for small farmers for the next planting season,” it said in a statement on Tuesday evening.
Already struggling with high public debt, poor creditworthiness and high inflation before the war in Ukraine, Tunisia was reeling from the Russian military blockade of Ukrainian Black Sea ports.
“Tunisia is facing a major grain supply shock due to difficulties in accessing financial markets and rising world prices, which have hampered the ability to source imported grain,” said Alexandre Arrobbio, World Bank country director for Tunisia.
Last year, Tunisia imported 60% of its bread wheat and 66% of its barley from the Russian Federation and Ukraine.
The loan, approved on Wednesday, aims to guarantee “affordable bread for the poor, barley for livestock and agricultural inputs for domestic grain production”, the World Bank said.
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Bread is a staple of the Tunisian diet, and bread shortages or price hikes have contributed to political upheavals in the past – including just before the 2010 uprising that toppled dictator Zine El Abidine Ben Ali and sparked the Arab Spring revolts.
The World Bank said its loan program is designed to “reduce import dependency by providing incentives to sustainably increase domestic grain production,” according to the World Bank.
The lender has in the past urged Tunisia to focus on “more labor intensive” crops such as citrus, arguing that Tunisia “does not have a strong comparative advantage in cereals”.
In April, the government unveiled a program to help farmers access better seeds, technical assistance and government-backed loans to improve their grain self-sufficiency.
Tunisia is expected to start formal talks with the International Monetary Fund in the coming weeks on a bailout package of around 2 billion euros in return for “ambitious reforms” to cut public spending and reform state-owned enterprises.
- AFP
