Real GDP growth was +1.9% y/y in the first three quarters of 2017, and Euler Hermes forecasts +2% for all of 2017 (after +1% in 2016). The main drivers in Q1-Q3 were tourism (+30% y/y in terms of arrivals), a rebound in phosphate output, and a genuine recovery of investment, particularly in the agricultural sector (+76.5% y/y in November). Despite the growth acceleration, Tunisia’s liquidity position worsened to a new low, ending 2017 with just three months of import cover, reflecting the need for continued IMF funding under the EEF program currently in place. But conditionality is tricky as the disbursement of USD320mn is subject to a decrease of the fiscal deficit to below -5% of GDP in 2018 from -6% in 2017 (Euler Hermes estimate), in a context where public spending was used to preserve social cohesion. Moreover, another policy dilemma was to let the TND depreciate to a new low of 3 TND per EUR (triggered by low foreign exchange reserves as well as an IMF request), with an impact on households’ purchasing power. Euler Hermes forecasts average inflation of 7% or so in 2018.