Tunisia expects surge in olive oil production to boost battered economy

Workers stand in front of crates of olives at a processing factory in Beni Hassen city. Tunisia expects olive production to jump by 160 percent in the 2017 season. (Reuters)
Updated 18 December 2017

Tunisia expects surge in olive oil production to boost battered economy

BENI HASSEN: Trucks loaded with boxes full of olives were queueing at a press plant in this small Tunisian town as the North African country sees a surge in olive oil production in a badly-needed boost to its ailing economy.
Tunisia, one of the world’s top three olive oil producers, expects olive production to jump by 160 percent to between 1.5 million tons and 1.6 million tons in the 2017 season which started in November, the agriculture ministry said
That will translate into up to 280 million tons of olive oil, about 80 percent of which will be exported, helping to generate hard currency needed to stabilize its battered dinar.
Tunisia has been in economic crisis since a popular uprising in 2011 ousted autocrat Zine El-Abidine Ben Ali. The crisis has deepened as militant attacks took their toll on the tourism industry and weakened the dinar against hard currencies.
“It will be an exceptional (olive) season thanks to much better rainfall than last year,” said Hamdi Khalifa, owner of an olive oil press in Bani Hassen, one of the main production areas located a two-hour drive south of the capital Tunis.
His workers produce 90 tons of olive oil each day in the press compared to 40 tons a year ago, he said. Prices have shot up with 10 liters of oil now selling for 90 dinars.
Last year’s production had been hit hard by a drought.
The production boom has helped ease unemployment in rural areas with farmers complaining that they are struggling to find enough farmhands.
Some 135,000 workers were needed for this year’s season for up to three months, the agriculture ministry said in a statement.
“I’m paying now (workers) 35 dinars a day but its not easy to find workers,” said Sabri Barki, a farmer who owns 100 olive trees in the Bani Hassen area.
“Prices have gone up.”
The olive oil industry relies on 70 million olive trees that cover around 1.7 million hectares. They provide a living for at least 500,000 families in the North African country of 11 million.
It hopes that rising olive oil exports will help reduce its record trade deficit, which hit $4.61 billion in the first nine months of this year.
Last month, the agriculture ministry said Tunisia aimed to export about 220,000 tons of olive oil this season compared with about 75,000 tons last season that brought in $320 million.
World olive production is expected to rise by 14 percent to 2.9 million tons in the 2017/18 season with Tunisia posting the highest gain with a 120 percent rise, according to the International Olive Council, an industry body.
Top producer Spain, which has been hit by a severe drought this year, is expected to post a 15 percent drop in output.
The government has been tying to boost production with loans for farmers. Stability in Tunisia is a concern for the European Union as unemployment has driven young Tunisians into illegal migration and joining militant groups abroad.
— Reuters

Record budget spurs Saudi economy

The budget sets out to lift spending and cut the deficit. (Shutterstock)
Updated 19 December 2018

Record budget spurs Saudi economy

  • “It is a growth-supportive budget with both capital and current expenditure set to rise.”
  • Government spending is projected to rise to SR 1.106 trillion

RIYADH: Saudi Arabia on Tuesday announced its biggest-ever budget — with spending set to increase by around 7 percent — in a move aimed at boosting the economy, while also reducing the deficit. 

However, analysts cautioned that the 2019 budget is based on oil prices far higher than today — which could prove an obstacle in hitting targets. 

Government spending is projected to rise to SR 1.106 trillion ($295 billion) next year, up from an actual SR 1.030 trillion this year, Minister of Finance Mohammed Al-Jadaan said at a briefing in Riyadh. 

The budget estimates a 9 percent annual increase in revenues to SR 975 billion. The budget deficit is forecast at SR 131 billion for next year, a 4.2 percent decline on 2018.

“We believe that the 2019 fiscal budget will focus on supporting economic activity — investment and wider,” Monica Malik, chief economist at Abu Dhabi Commercial Bank (ADCB), told Arab News.

“It is a growth-supportive budget with both capital and current expenditure set to rise.”

A royal decree by Saudi Arabia’s King Salman, also announced on Tuesday, ordered the continuation of allowances covering the cost of living for civil sector employees for the new fiscal year.

“The continuation of the handout package will be positive for household consumption by nationals,” said Malik. “We expect to see some overall fiscal loosening in 2019, which should support a further gradual pickup in real non-oil GDP growth.”

World oil prices on Tuesday tumbled to their lowest levels in more than a year amid concerns over demand. Brent crude contracts fell to as low as $57.20 during morning trading.

Malik cautioned that the oil-price assumptions in the Saudi budget looked “optimistic.”

“We see the fiscal deficit widening in 2019, with the higher spending and forecast fall in oil revenue,” she told Arab News.

Jason Tuvey, an economist at London-based Capital Economics, agreed that the oil forecast was optimistic, but said this should not pose problems for government finances.

“The government seems to be expecting oil prices to average $80 (per barrel) next year,” he said. 

“In contrast, we think that oil prices will stay low and possibly fall a little further to $55 … On that basis, the budget deficit is likely to be closer to 10 percent of GDP. That won’t cause too many problems given the government’s strong balance sheet. 

“Overall, then, we think that there will be some fiscal loosening in the first half of next year, but if oil prices stay low as we expect, the authorities will probably shift tack and return to austerity from the mid-2019, which will weigh on growth in the non-oil sector,” Tuvey said.

John Sfakianakis, chief economist at the Gulf Research Center, based in Saudi Arabia, said that the targets of the budget were “achievable” and the forecast oil price reasonable. 

“It is an expansionary budget that should spurt private sector activity and growth,” he said. 

“With Brent crude averaging around $68 per barrel for 2018 and $66 per barrel for 2019, the authorities have applied a conservative revenue scenario.”