Tunisia: An economy drowning in debt

A vendor displays snails at a market in downtown Tunis, Tunisia. (Reuters)
Updated 31 January 2018
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Tunisia: An economy drowning in debt

TUNIS: Tunisia was widely hailed as the only democratic success story to emerge from the Arab Spring uprisings of 2011. Today, the country is drowning in public and personal debt, and social turmoil.
According to official figures from the Finance Ministry, the budget deficit now stands at $2.2 billion.
State debt now accounts for 71 percent of the country’s gross domestic product (GDP), up from 41 percent in 2010, when the deficit was 650 million dinars ($272.5 million).
At a time when the global economy is growing faster than it has for a decade, Tunisia’s growth languishes at 2.3 percent, well below the 5.6 percent average achieved in the Arab world 10 years ago.
The International Monetary Fund (IMF) insisted that Tunisia implement controversial reforms before receiving the next tranche of a $2.9-billion loan that was negotiated in 2016 with a view to stimulating economic growth and job creation.
The new fiscal measures raised taxes on a wide range of everyday goods, increased levies on some imported goods, and added a percentage point to the value-added tax (VAT).
With state social security funds $1 billion in the red, Parliament also approved a new 1 percent social security tax on employees and companies.
Speaking on Tuesday in Marrakech, IMF chief Christine Lagarde said the reforms are necessary.
“The IMF understands the frustrations of the Tunisian people, who have not yet felt the full economic benefits of their country’s political transformation,” she said. “This process is difficult and takes time.”
Lagarde also urged Arab governments to urgently create jobs. Unemployment in Tunisia among young people is estimated at 30 percent.
Ahmed Sassi a member of the secretariat for the UDC, the union for unemployed graduates, said Tunisia has been blighted by successive governments following a flawed economic model and “self-destructive” policies.
“The model we have for development is increasing the disparity between the rich north, and the south and interior of the country,” he told Arab News.
For example, at the height of the orange season, farmers face great problems in distributing and exporting their produce.
Sassi also pointed to “missed opportunities” to develop markets for Tunisia’s wheat cultivation and flowers for essential oils for the perfume industry, and to capitalize on the country’s strength in the olive oil market.
He also criticized the lack of “audacity and courage” regarding technologically innovative projects, such as a solar-energy farm in the south.
Meanwhile, when negotiations with PayPal fell through last May, young digital entrepreneurs were left in the lurch because they could not make international payments online.
For big donors such as the EU and the World Bank, Tunisia’s rampant corruption continues to put off investors.
Prime Minister Youssef Chahed was elected on an anti-corruption platform, but has achieved little in practice.
The head of the National Anti-Corruption Authority, Chawki Tabib, has estimated that corrupt transactions cost Tunisia $840 million a year, a sum that would almost halve the national deficit if it were put back into the economy.


Israel showed Russia proof Syria was responsible for downing plane

Updated 20 min 1 sec ago
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Israel showed Russia proof Syria was responsible for downing plane

JERUSALEM: Israel provided Moscow with proof it was not responsible for the downing of a Russian plane in Syria, an Israeli military official said on Friday.
Fifteen Russian crew were killed when the IL-20 surveillance plane crashed near Latakia in northern Syria on Monday. Russia has said Syria shot the plane down shortly after Israeli jets hit a target in the area.
An Israeli delegation including its air force chief and other officers traveled to Moscow to brief about the incident.
“We proved how the Syrian reckless anti-air fire was the direct cause of hitting the Russian aircraft,” said the military official, who briefed reporters on condition of anonymity. “They fired quite recklessly and irresponsibly and unprofessionally into the air long after our planes were no longer there.”