Tunisian president suggests taxing rich as solution to fiscal problem

[1/2] A man gestures while holding a picture of Tunisia's President Kais Saied as people rally in Tunis, Tunisia March 20, 2023. REUTERS/Jihed Abidellaoui/File Photo

TUNIS, June 3 (Reuters) - Tunisian President Kais Saied on Saturday suggested raising taxes on richer people could be an alternative to socially painful reforms as a means to secure an international financial rescue package.

Tunisia's government negotiated a preliminary agreement in October with the International Monetary Fund (IMF) for a $1.9 billion loan in return for cuts to subsidies and the public sector wage bill and reform of state-owned companies.

Credit ratings agencies have warned that Tunisia faces a possible default on sovereign debt without the loan, which is also expected to unlock more bilateral financing.

The IMF has said Tunisia needs to put its finances on a more sustainable trajectory and has previously voiced concern at the level of its public wage bill, subsidies, low tax base and support for unprofitable state-owned companies.

Although the IMF deal reached in October was based on proposals made by Tunisia's government, Saied has described the fiscal reforms it contained as "diktats". Without his approval, the agreement - and loan - cannot be finalised.

Speaking to French President Emmanuel Macron in a remarks published by Saied's office, he described the IMF deal conditions as "tantamount to lighting a match next to a high explosives".

"Another scenario could be based on putting taxes on those who do not need support", in order to maintain social justice, his office quoted him as saying.

Saied also proposed a summit meeting on the issue of illegal migration across the Mediterranean. Italian Prime Minister Giorgia Meloni will visit Tunisia next week, Tunisian state media reported on Friday.

Reporting by Angus McDowall; Editing by David Holmes

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