TUNIS (Reuters) - Saudi Arabia will lend Tunisia $500 million at a favorable interest rate and will finance two projects worth $140 million, two sources told Reuters on Wednesday, a day after a visit from the Saudi crown prince that drew Tunisian protests.
Hundreds of Tunisians staged the first demonstrations in the Arab world against Saudi Arabia’s crown prince, Mohammed bin Salman, on his visit on Tuesday, denouncing him as a murderer involved in the killing of Saudi journalist Jamal Khashoggi.
The kingdom’s de facto ruler faces no overt criticism at home and received lavish receptions earlier in his tour in visits to Bahrain, the United Arab Emirates and Egypt.
The crown prince 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 advisor to the president, told state television.
Two Tunisian sources - an official and a source close to the discussions between Prince Mohammed and 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.
Tunisia is struggling to cut its budget deficit, stabilize 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 percent of GDP this year from 6.2 percent last year.
The crown prince 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.”
Reporting by Tarek Amara; Editing by Peter Graff and Sonya Hepinstall