U.S. Loan Guarantee Supports Tunisia's Democratic Transition

The loan guarantee, signed June 8 in Washington, will help the government of Tunisia access international private capital and strengthen its capacity to manage the transition to an economically sound and prosperous democracy. The guarantee will make it easier for Tunisia to borrow money from international markets to provide critical services to its citizens, such as vocational and technical training, higher education and programs that help banks provide financing to small businesses, according to the U.S. Agency for International Development (USAID).

“I am honored to be signing this agreement today with [Tunisian] Ambassador [Mohamed] Tekaya,” said Mara Rudman, assistant administrator for the Middle East Bureau at USAID. “Coming on the heels of Secretary Clinton's May 17 acknowledgement of the $100 million Cash Transfer Agreement between our two countries, this loan guarantee agreement represents the continued strong commitment of the American government and people to the success of Tunisia's transition.”

The amount of the Tunisian bond to be guaranteed by the United States has not yet been determined, but is expected to be more than $400 million for a seven-year bond. This will be the first international bond Tunisia has issued since 2007, and could be a turning point in Tunisia's access to and integration in global capital markets, USAID said. Final terms, pricing and the face amount of the bond will be determined at official entry into force of the agreement and shortly before the financial closing, which is expected to be in June or July, the aid agency said.

The U.S. Congress authorized the use of up to $30 million to provide this loan guarantee facility for Tunisia. The signing of this loan guarantee agreement fulfills the commitment made by Treasury Secretary Tim Geithner and Tunisian Finance Minister Houcine Dimassi on April 20, when they signed a declaration of intent to proceed as quickly as possible on a loan guarantee agreement that would allow Tunisia to move forward with a debt issuance. The U.S. loan guarantee for Tunisia is also an example of how the Deauville Partnership with Arab Countries in Transition has helped transitioning countries reintegrate into international capital markets under reasonable financing terms to fill their sizable financing gaps and to allow their enterprises to invest in job-creating projects, USAID said.

"We look forward to continuing to work with the Tunisian government and people as they lay the groundwork for a future of economic prosperity that empowers women and youth, strengthens civil society, and solidifies the foundations of democracy," said William B. Taylor, special coordinator for Middle East transitions at the State Department.