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Abu Dhabi, UAEWednesday 19 December 2018

Saudis to lend Tunisia $500 million and finance projects 

The news came a day after Crown Prince Mohammed bin Salman visited the country

Saudi Arabia will lend Tunisia $500 million (Dh 1.8 billion) at a favourable interest rate and will finance two projects worth $140 million (Dh 515 million), two sources told Reuters a day after a visit from the Saudi Crown Prince.

Crown Prince Mohammed bin Salman was received by President Beji Caid Essebsi, who awarded him the republic's medal, the highest official award. Tunisia has struggled economically and is hungry for foreign funding.

"Tunisia will announce in a few days important deals with Saudi, including a loan with low-interest rate, agreements on investment and other important details", Nourredine Ben Ticha, an adviser to the president, told state television.

Two Tunisian sources — an official and a source close to the discussions between Prince Mohammed and Mr Essebsi — told Reuters that the loan would be worth $500 million. They said that the Saudi Development Fund will also finance two projects worth about $140 million, but did not give more details.

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Tunisia is struggling to cut its budget deficit, stabilise falling foreign currency reserves and manage expectations of international lenders demanding reforms such as trimming the public wage bill.

Tunisia’s economy has been in turmoil since autocrat Zine Al Abidine Ben Ali was toppled in a 2011 uprising sparked by anger at unemployment, poverty and record levels of inflation.

Under pressure from the International Monetary Fund, Prime Minister Youssef Chahed has aimed to cut the budget deficit to about 4.9 per cent of GDP this year from 6.2 per cent last year.

Prince Salman told Tunisian state television that Saudi Arabia has long had good relations with Tunisia: "I cannot come to North Africa without visiting Tunisia... Tunisia’s president is like my father."

The visit was the fourth leg of his regional tour — that included the UAE, Bahrain and Egypt — before he travelled to Argentina for start of the G20 summit on Friday.

However, hundreds of Tunisians staged the first demonstrations in the Arab world against Saudi Arabia’s crown prince on his visit on Tuesday, denouncing him for the murder of Saudi journalist Jamal Khashoggi at the Istanbul consulate. A group of senior aides and officials have been implicated and arrested for the murder which Saudi officials have said was carried out without the knowledge of the royal family.

Some Tunisians were angered by Saudi Arabia for allowing Mr Ben Ali to live in Riyadh since fleeing Tunis after the protests.