The World Bank approved financing worth $300 million to help poor people in Tunisia deal with the economic impact of the coronavirus pandemic.
Funds worth $245m will be transferred to about one million Tunisians as part of the Social Protection Emergency Project, the World Bank said in a statement on Thursday.
The new scheme will also help protect more than 100,000 vulnerable children under five years old by covering their health and educational needs through a new child allowance programme.
“Tunisia needs a sound social safety net to help protect the poor against the worst effects of health and economic crises such as the ones we are experiencing today,” Tony Verheijen, World Bank Tunisia country manager, said.
“This new project will help the government of Tunisia accelerate the implementation of its safety net programme, protect the health and education of the most vulnerable children, and ultimately improve the lives of millions of Tunisians in the years ahead.”
Tunisia’s finances have been heavily impacted by the Covid-19 health crisis, which has hit the North African country’s revenue generating sectors like tourism.
The economy contracted 8.2 per cent in 2020 while its fiscal deficit is also projected to have widened to 11.5 per cent of gross domestic product, the International Monetary Fund said in January.
The worsening economic situation has also led to an increase in unemployment and poverty in Tunisia. The World Bank said the recent tranche of funding will help families ride out the crisis.
Of the total amount provided by the lender, $32m will be allocated to increase allowances for vulnerable families with children under 5 years old to provide better access to health services and education, while $22m will be spent to strengthen the social protection system “to deliver efficient and inclusive programmes capable of protecting Tunisians through any crisis in the years and decades to come”.
The World Bank’s latest support follows $100m in financing to help Tunisia access Covid-19 vaccines, which it approved last month.
Earlier this year, Moody’s Investors Service downgraded Tunisia’s credit rating to B3, six notches below investment grade, as a result of the government’s weakening ability to implement fiscal and public sector reforms amid rising political tensions in the country.
Last year, the IMF approved a $745m emergency loan for Tunisia to help the country mitigate the impact of the Covid-19 crisis on its economy last year.