Tunisia’s Finance Minister Lamia Zribi

Tunisia is likely to sell stakes in three state-owned banks this year and cut up to 10,000 public sector jobs as part of reforms demanded by the International Monetary Fund (IMF), which has postponed the payment of the second tranche of a loan, the finance minister said.

Six years after its 2011 pro-democracy uprising, Tunisia is struggling to make economic progress. Last June, the IMF released the first tranche of a loan worth $320 million.

Finance Minister Lamia Zribi told Reuters in an interview a second payment had not been made.

“The IMF postponed the payment of a second tranche worth $350 million scheduled last December because of lack of progress in reforms, including public sector wage bill, the public finances and state banks,” the minister said.

Zribi said an IMF delegation had been expected in Tunisia next month to discuss reforms and the third tranche of the loan, but the team will not come if they did not see reform progress. Any official suspension of IMF installments of the loan could push other international partners to retreat from lending to the North African state.

Zribi said the government was ready to launch a new push on the reforms package in the public sector, the banking sector, state companies and taxes.

The minister said the government would immediately begin plans for a voluntary layoff program for state employees by encouraging early retirement, aiming to cut at least 10,000 public sector jobs in 2017 through the program.

“The wage bill in Tunisia rose to 14.4 percent so far and is among the highest level in the world. We will cut it to 14 percent by the end of 2017 and about 12.5 percent in 2020,” Zribi said.

The reform of three state banks, Societe Tunisienne de Banque (STB), Banque Nationale Agricole (BNA) and Bank de l’Habitat (BH) are among urgent steps demanded by the IMF.

The government also plans to sell a number of companies confiscated from former President Zine El Abidine Ben Ali’s family in telecommunications, media and service sectors.

Zribi said Tunisia expects to earn less than $300 million from the sale of these companies.

But the minister said there are also positive indicators for the return of growth this year with higher tourist bookings for the peak summer season and a higher level of phosphate production in the first two months of 2017.

Tunisia’s government expected 2.5 percent growth this year, but Zribi believes it could achieve 3 percent, with the continuation of those positive indicators and forecasts of a good agriculture season.