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Tunisian finances are in the red (Photo: F.Dubessy)
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TUNISIA. In a report published Wednesday, September 7, 2022, the World Bank draws a pessimistic picture of the "economic situation of Tunisia. According to the international institution, growth should not exceed 2.7% in 2022, while the trade deficit, up 56%, crossed the 8% of GDP in the first half of 2022. The World Bank forecasts a budget deficit of 9.1% in 2022. It was 7.4% in 2021, "under the weight of rising energy and food subsidies.
Like everywhere else in the world, inflation is continuing to rise in Tunisia, reaching 8.1% in June 2022 (on a rolling 12-month basis).
Deprived of strong growth, faced with increasing trade balance and budget deficits, Tunisia has no choice but to go into debt. According to figures from the Tunisian Ministry of Finance, in May 2022 the public debt was estimated at 79.5% of the country's GDP. It is expected to exceed 82% of GDP by the end of the year.
Equally alarming is the fact that Tunisia's foreign exchange reserves will only cover ninety days of imports.
The rating agencies sanction the Tunisian economy by regularly lowering its rating. They went from BBB + in 2011 to CCC- in 2021.
Like everywhere else in the world, inflation is continuing to rise in Tunisia, reaching 8.1% in June 2022 (on a rolling 12-month basis).
Deprived of strong growth, faced with increasing trade balance and budget deficits, Tunisia has no choice but to go into debt. According to figures from the Tunisian Ministry of Finance, in May 2022 the public debt was estimated at 79.5% of the country's GDP. It is expected to exceed 82% of GDP by the end of the year.
Equally alarming is the fact that Tunisia's foreign exchange reserves will only cover ninety days of imports.
The rating agencies sanction the Tunisian economy by regularly lowering its rating. They went from BBB + in 2011 to CCC- in 2021.
Tunisia lacks foreign exchange reserves
The World Bank sees in these bad figures the result of the Covid crisis, the war in Ukraine, and the lack of economic reforms.
A state-owned company with a monopoly on the import of many consumer food products, the Office du Commerce de Tunisie (OCT) is struggling to fulfill its mission. Indeed, Tunisia lacks foreign exchange reserves, the prices of imported goods are increasing while the OCT must maintain low prices to avoid a social unrest in a few months of legislative elections scheduled for December 17, 2022. As a result, the shortage of products (sugar, flour, butter, coffee, milk, etc.) has increased since the beginning of the summer of 2022.
In August 2022, the Tunisian government and the main trade unions, led by the powerful General Union of Tunisian Workers (UGTT), reached an agreement to immediately begin negotiations on the economic reforms requested by the International Monetary Fund (IMF) in exchange for its support and the release of a new loan of €4 billion.
A state-owned company with a monopoly on the import of many consumer food products, the Office du Commerce de Tunisie (OCT) is struggling to fulfill its mission. Indeed, Tunisia lacks foreign exchange reserves, the prices of imported goods are increasing while the OCT must maintain low prices to avoid a social unrest in a few months of legislative elections scheduled for December 17, 2022. As a result, the shortage of products (sugar, flour, butter, coffee, milk, etc.) has increased since the beginning of the summer of 2022.
In August 2022, the Tunisian government and the main trade unions, led by the powerful General Union of Tunisian Workers (UGTT), reached an agreement to immediately begin negotiations on the economic reforms requested by the International Monetary Fund (IMF) in exchange for its support and the release of a new loan of €4 billion.
