(Bloomberg) -- Tunisian authorities have made “very good progress” on the steps needed to approach the International Monetary Fund’s board for approval of a loan program, according to the lender’s chief.

Speaking in an interview with Asharq, IMF Managing Director Kristalina Georgieva said she expects “to see in the next weeks — not months — a conclusion of the remaining actions so we can go to the board and Tunisia can get the support from the IMF and from its partners that are affiliated with this program.”

The comments signal a breakthrough could be near after a deadlock lasting months. Political strife the country is facing after President Kais Saied assumed broader powers in July 2021 has amplified worries about default risk, as has his deadlock with the powerful labor unions.

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In December, the IMF postponed a meeting of its executive board to review an agreement that its staffers reached two months earlier with Tunisian authorities on a four-year, $1.9 billion loan. Authorities also said they planned to refile an economic reform plan with the IMF in January.

Enthusiasm initially triggered by the deal quickly ceded to growing tensions domestically. At the same time, Saied, who has final say on such matters, has repeatedly dismissed the urgency for securing foreign aid. 

Still, the managing director’s comments suggest that progress is being made, even as the unions dig in against Saied and a crackdown on on his critics has escalated. 

Georgieva said the IMF has “heard from the friends of Tunisia that the financial support for Tunisia is forthcoming.”

The powerful UGTT union, which had initially backed Saied’s power grab, has accused officials of reneging on a wage hike agreement for public sector workers that was key to securing the staff level deal with the IMF. 

Among the toughest issues yet to be resolved is the fate of a bloated public sector and over 100 state-owned enterprises where the UGTT holds powerful sway. 

When the government last week announced a draft decree dealing with those companies, the plan drew quick criticism from the union. At the same time, Tunisians are struggling with record high inflation, shortages of basic goods and a rising youth unemployment rate. 

Any IMF deal would also likely involve cutting spending to bring under control the public sector wage bill, as well as easing subsidies — changes likely to further fuel inflation and batter a population whose frustration was evident with record low turnout in two recent parliamentary votes. 

--With assistance from Souhail Karam.

(Updates throughout with detail, context)

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