Saudi Arabia saves Tunisia: $500 million as loan and grant

(Patria) - Saudi Arabia will give Tunisia $500 million in the form of a soft loan and grant to support its economy, said the Kingdom's ambassador to Tunisia, Abdel Aziz al-Saqer.

The financial aid promised to Tunisia consists of $400 million in a soft loan and $100 million in a grant. The agreements were signed in Tunis by the Saudi and Tunisian finance ministers.

Tunisia is currently in talks with the International Monetary Fund (IMF) regarding a proposed $1.9 billion loan that the IMF offered to the North African country last year.

Talks have been stalled since October, after Tunisian President Kais Saied rejected the loan conditions of the economic body. Tunisia is preparing a proposal to present to the IMF, a senior government official said in June.

Saied told IMF Managing Director Kristalina Georgieva during a meeting in Paris in June that the conditions for providing financial support to the country risk sparking civil unrest. Saied reiterated at the meeting with Georgieva that cutting subsidies, mainly for energy and food, could have harmful consequences for the country, recalling the deadly riots that hit Tunisia in 1983 after the government raised the price of bread. Without the loan, Tunisia faces a full-blown balance of payments crisis, agencies report.