New Tunisian PM promises growth, reform and new hope

(Reuters) - Tunisian Prime Minister Habib Essid promised quick reforms to stimulate growth as he took office on Friday at the head of a coalition government combining secular and Islamist parties. Four years after toppling autocrat Zine El-Abidine Ben Aliand inspiring Arab Spring uprisings in nations like Egypt, Libya and Syria, Tunisia is widely praised as a model for the region, having held free elections last year and adopted a new constitution.

But it faces pressure from its international lenders to curb high public spending, including by cutting politically sensitive subsidies on basic foods and fuel. Jobs, high living costs and economic opportunities are the main worry for most Tunisians.

"After the success of the democratic transition, now we must make a successful economic transition, stimulate growth, fight poverty and open new windows of hope to desperate youths," Essid said.

"We must immediately start structural reforms of the economy and new development schemes because temporary solutions are no longer appropriate."

Essid, an independent, will lead a coalition between the secular Nidaa Tounes party, which won the most seats in elections in October, its Islamist rival Ennahda and other smaller parties. It took a month to negotiate the line-up of the new cabinet, in which Ennahda will lead the employment ministry and hold three other junior ministerial posts.

The government sees economic growth accelerating to 3 percent in 2015 from an estimated 2.5 percent in 2014, while the budget deficit is expected to narrowto 5 percent of gross domestic product from 5.8 percent.

The International Monetary Fund agreed in 2012 to support Tunisia with a two-year credit programme worth $1.74 billion, of which Tunis is still waiting for the final instalment. In exchange, it agreed to keep its deficit under control and make the foreign exchange market more flexible.

Essid also faces security challenges. The armed forces are cracking down on Islamist militants who emerged after the 2011 revolution and have carried out attacks mostly on the military. Tunisia is also a major source of jihadi fighters heading abroad to join conflicts like Syria's civil war.