Tunisian coalition fails to agree on economic reforms, cabinet reshuffle

Tunisia's ruling coalition has failed to agree on a new economic reform plan and a cabinet reshuffle, officials said on Monday, in a new political setback as the International Monetary Fund (IMF) prepares to review the next loan tranche.

The North African country has been hailed as the Arab Spring's only democratic success because protests toppled autocrat Zine El Abidine Ben Ali in 2011 without triggering violent upheaval, as happened in Syria and Libya.

But since 2011, nine cabinets have failed to resolve Tunisia's economic problems, which include high inflation and unemployment, and impatience is rising among lenders such as the IMF, which have kept the country afloat.

Officials from the two ruling parties, the secular Nidaa Tounes, conservative Ennahda and labour and employers' unions agreed last week to start a new economic programme.

But talks broke off on Monday after the parties failed to hammer out details, said a spokeswomen for President Beji Caid Essebsi, who had been hosting the negotiations.

Ennahda had rejected calls from the Nidaa Tounes to sack Prime Minister Youssef Chahed, a technocrat, or conduct a major cabinet reshuffle.

"We cannot agree to change the government at this sensitive time," its leader Rachid Ghannoushi told reporters. "Ennahda has been known as a party which makes concessions, but this time we cannot do so, in the interests of the country which needs stability."

Big failure

That leaves Chahed in office for now, though it is unclear how much power he still has after the parties failed to agree on how to tackle Tunisia's economic crisis.

"It s a big failure for the country ... Today the government will get weaker as the political scene is deeply divided," said Kamel Morjan, head of the small Moubadara party, which is part of the government.

Seven prime ministers have failed to fix a sluggish economy. Turmoil and militant attacks have deterred investors and tourists, eroding living standards of ordinary people and causing an increase in unemployment.

Annual inflation hit a record level of 7.7 percent in April as the dinar tanked, making food imports more expensive.

The IMF is due to review the next tranche of its loan plan in June, diplomats said.

Chahed has been pushing to overhaul loss-making state firms, making enemies with the powerful labour union UGTT.

"We failed to reach an agreement [on the economic programme]... We are not committed to any decision in the future," UGTT leader Noureddine Taboubi said, declining further comment.