Tunisia's Prime Minister Mehdi Jomaa.

Tunis - Prime Minister Mehdi Jomaa said on Monday that Tunisia's external borrowing needs this year will be nearly double previous budget estimates at around $8 billion, mainly because of rising public sector pay.

Jomaa, whose technocrat government is supposed to tide Tunisia over to elections later this year, called for more reforms to state subsidies and said the North African state would seek more aid from Gulf countries, former colonial power France, and the United States.

“We have been expecting to borrow 7 billion dinars ($4.43 billion) in 2014, but, because of the economic crisis and the sharp rise in the deficit, our foreign borrowing needs will be between 12 and 13 billion dinars,” Jomaa said in an interview with state television.

He gave no figure for the deficit but said it had widened mainly because of public sector pay and losses from public companies.

“We have to make some painful sacrifices, which could be through rationalising subsidies, but without touching the poorer classes,” he said. “This year, there will be no more new public sector employment.”

Three years after the uprising that ousted autocrat Zine El-Abidine Ben Ali and touched off Arab uprisings elsewhere, Tunisia is seen as a test case of the prospects for transition to full democracy.

It overcame a political crisis last year.

Trimming the deficit and public spending on subsidies is one of the biggest challenges for Jomaa's government as it tries to ensure stability before elections.

It is a delicate balance.

Attempts to increase a vehicle tax late last year ignited social protests and anti-austerity riots that forced the previous government to roll back the measure.

Tunisia, heavily reliant on foreign tourism, plans to issue around $1.8 billion in new foreign bonds with guarantees from the United States and Japan, and a $435 million sukuk, this year, to help its economy recover after the 2011 uprising.

It has already secured $1.2 billion in World Bank loans to support its democratic transition and economic reforms in 2014.

The International Monetary Fund has also approved a $507 million loan tranche for Tunisia, the second part of a $1.7 billion credit agreed at the start of 2013.

International lenders are pressing the North African country to trim public subsidies and other state spending to cut a budget deficit that reached 8.3 percent in 2013. - Reuters