Econostrum | Economic News in the Mediterranean

Tunisian President Kaïs Saïed assumes full powers

Written by Frédéric Dubessy on Tuesday, July 27th 2021 à 16:45 | Read 443 times

Kaïs Saïed takes over Tunisia (photo: Tunisian Presidency)
Kaïs Saïed takes over Tunisia (photo: Tunisian Presidency)
TUNISIA. A decade after the Jasmine Revolution, seven years after the vote on a new constitution, is the Tunisian government tempted to take a step backwards? Would it succumb to the temptation of returning to dictatorship? On Sunday evening, July 25, 2021, President Kaïs Saïed decreed a freeze on the activities of the Assembly of People's Representatives (ARP - the Tunisian Parliament) for thirty days, dismissed Prime Minister Hichem Mechichi, who had been in office for less than a year, and thus took over all executive functions. At the same time, he lifted the parliamentary immunity of the deputies and banned sixty-five parliamentarians from leaving the Tunisian territory.

Kaïs Saïed is in fact blowing the whistle on the end of the game, while an open conflict opposes him to the Ennahdha party, the main political force in Parliament, and has led to a paralysis in the governance of the country for the past six months. Especially since the head of government, Hichem Mechichi, is supported by this Islamo-conservative party, even if his team is composed of technocrats. The latter said at the time of his appointment, which today sounds like a prediction or a magnificent intuition: "my government will not be able to make progress on economic problems, as long as it is not caught in any political tug-of-war."


The opposition denounces a coup d'état

On his Facebook page, Rached Ghannouchi, president of parliament since November 2019, was quick to denounce "a coup against the revolution and against the Constitution." He assures that "the supporters of Ennahdha (editor's note: formation of which he is the leader) as well as the Tunisian people will defend the revolution." Kaïs Saïed defends himself with nuance: "the Constitution does not allow the dissolution of the Parliament, but it allows the freezing of its activities." He relies on Article 80 of the text which, however, only offers this possibility in the event of "imminent danger". He said that Tunisia "is going through the most delicate moments in its history" and that the president should not remain alone in the executive for long. He announced the forthcoming designation of a new head of government, which he will however appoint himself.

From now on, since Monday 26 July 2021 at dawn, the army forbids the deputies to enter the Parliament. On the evening of Sunday 25 July 2021, Rached Ghannouchi asked the Tunisian people to organise a demonstration to regain power. The next day, he observed a sit-in in front of the ARP in his car.

These decisions come after an emergency meeting at the Palace of Carthage, the seat of the presidency, provoked by the numerous demonstrations, particularly in Tunis in the middle of a curfew, demanding the "dissolution of the Parliament". These movements were mainly motivated by the Covid-19 crisis.

Highest mortality rate in Africa and the Arab world

The country has been experiencing an outbreak of the epidemic for several days (the Delta variant is responsible for almost half of the cases), while the infrastructure is no longer able to keep up. Divided, the Tunisian authorities have proved unable to manage the situation. It is considered "serious" by Yves Souteyrand, local representative of the World Health Organisation (WHO), who points out that "all indicators are in the red. The Tunisian Ministry of Health, through its spokesperson Nissaf Ben Alaya, already judged the situation to be "catastrophic" on 8 July 2021 and admitted, without appeal, that "the health system has unfortunately collapsed". Before admitting, "if we don't unite our efforts, the disaster will get worse."

Faced with the saturation of its health system and the failure of the Covax international vaccine donation mechanism (a programme intended for the least developed countries), which has only sent 1.6 million doses, i.e. one-sixth of those promised, donations have multiplied in recent hours. They have averted a health catastrophe in this country of 11.9 million people. The Johns Hopkins University resource centre calculates that only 2.6 million doses have been administered for 825,410 completed vaccinations. This is only 7.06% of the total population. According to the same source, 569,289 confirmed cases have been recorded, with 18,600 deaths since the beginning of the pandemic. On Sunday 25 July 2021 alone, 5,359 new cases were reported and 231 deaths occurred. The day before, the country had a record number of Covid-19 patients who died in one day, with 317 victims. July 2021 is already a record month in all categories of pandemic statistics, with only a few days left before the end of the pandemic. Even Rached Ghannouchi has been affected. In an interview with Arab News, Yves Souteyrand revealed that Tunisia had the highest mortality rate in Africa and the Arab world.

Responding to Tunisia's call for help, France offered more than one million doses of AstraZeneca and Janssen vaccines to provide 800,000 Tunisians with the precious sesame, said Jean-Baptiste Lemoyne, French Secretary of State for Health. It has also sent two million FFP2 masks and twenty-five oxygen concentrators. Several European and Gulf countries as well as China and Algeria also responded, bringing the total number of doses received to 3.2 million. According to the Tunisian Minister of Health, this figure should rise to 5 million by mid-August. Not to mention the donations from the diaspora and those from associations and institutions ensuring the arrival of essential equipment for hospitals.

Tunisia close to default

After the health and political crises, another one is looming: the economic one. In 2020, Tunisia's GDP fell by 8.8% and the budget deficit rose to 11.4% of GDP with a current account deficit of 6.7% of GDP. The public debt overhang reached 89% of GDP and the public debt 2.7 times exports.
The Central Bank of Tunisia (BCT) is sounding the alarm as foreign exchange reserves have fallen by 8% between the end of 2020 and the end of March 2021. Only $8.4bn remains, 49% of which is fed by the four International Monetary Fund (IMF) loans still active.

The rating agencies Moody's (B2 to B3) and Fitch (B to B-) have just successively downgraded Tunisia's long-term foreign currency default rating with a negative outlook. The first in February 2021, the second on July 9 of the same year. Tunisia is now only one step away from a C rating, which would mean a default.

In his study published on 19 July 2021, Olivier le Cabellec stated that "without a salutary shock, a default on external debt is quite likely." And the economist from the Crédit Agricole Group added: "Inflation-wage spiral under pressure from the social partners, the cost of debt drifting to 25% of budgetary expenditure, monetisation of public deficits by the Central Bank under pressure from the government: the responses to the crisis are not going in the right direction. And this feeds both government instability and the mistrust of external creditors." Olivier le Cabellec adds that "like Lebanon, the usual external creditors (IMF, multilaterals, European countries and Gulf countries) are increasingly reluctant to help emerging countries where political blockages (and not an external crisis like Covid's) are leading them into a spiral of difficulties. Moreover, and as in the case of Beirut, only a prior agreement with the IMF can unlock funds from friendly countries willing to support Tunis financially."

This agreement with the Bretton Woods institution is behind schedule and is expected by the end of 2021. On condition that the reforms, especially fiscal, essential to the recovery of the country are put in place. This will necessarily require an agreement between the President and the Parliament to have them voted.

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