Analysis: How Tunisia reached financial meltdown

Asia's Tech News Daily

Analysis: How Tunisia reached financial meltdown
© Provided by Al Jazeera Tunisia’s President Kais Saied meets newly appointed Prime Minister Najla Bouden Romdhane in Tunis last month [File: Reuters]

Tunis, Tunisia – The shock that followed the July 25 power grab by President Kais Saied is gone, and Tunisians now wake up to one of the most dangerous economic crises since independence.

Because everything is politicised in Tunisia, people like to harangue about who is responsible for the collapse of the country’s economy rather than understand its real causes and discuss the best solutions to save it.

Decades of corruption, clientelism, and the absence of any form of strategic planning are not the only symptoms of the chronic economic crisis inherited by post-revolution Tunisia. Some phenomena have been aggravated. Others were born with the revolt.

Although easily available, Tunisians hardly give importance to the real figures about their country’s finances and external debt.

Official government data show that Tunisia has about 700,000 public workers, including school and university teachers. In 2020, the total salary bill was about $5.6bn, thus absorbing nearly 70 percent of the state’s yearly resources.

Both for legitimate rights or merely for political aims, thousands of strikes and sit-ins have taken place every year since 2011.

Backed by the extremely strong Tunisian General Labour Union, or UGTT, workers in the public and private sectors have won varying amounts of salary increases after the 2011 revolution, much more than any time before.

The rates of civil servants’ absenteeism are high and industrial production is close to zero. UGTT, Tunisia’s main trade union, has played a major political and social role after 2011.

“UGTT has closely and strongly contributed to all the stages of the political process in Tunisia since 2011,” noted Adel Samaali, a Tunisian banker and financial expert.

“This organisation was represented by ministers and high officials in all the governments constituted after the revolution. Their views and decisions were always heard and taken into consideration.”

Historically controlled by Tunisia’s Marxist parties and extreme-left unionists, UGTT is often criticised for bureaucracy and corruption and blamed for hindering any plan for social and economic reforms.

The consumer goods distribution sector is controlled by powerful and corrupt intermediaries who are neither the producers nor the sellers but the ones who decide prices.

Bureaucracy, systematic corruption in the customs and public services, and decaying legislation discourage any form of investment by Tunisians or international companies. Hundreds of foreign firms that were here ended up leaving the country.

A handful of families and business groups have controlled the whole of Tunisia’s economy since 1956.

Although rich in natural resources – phosphate, oil and gas, salt – and agricultural products – wheat, olive oil, dates, fish, fruit – these sectors contribute little or nothing to the gross national product.

Added to political instability and security incidents, mainly since 2014, production and export reached their lowest rates ever.

The devaluation of the Tunisian currency has led to an increase in prices and an unprecedented inflation rate estimated at 6.2 percent today.

While Tunisia’s unemployment rate reached 17.8 percent in March, an additional 600,000 Tunisians have fallen below the poverty line following two years of the COVID-19 pandemic.

Analysis: How Tunisia reached financial meltdown
© Provided by Al Jazeera Demonstrators carry flags and banners during a protest against Tunisian President Kais Saied’s seizure of governing powers on October 10 [File: Zoubeir Souissi/Reuters]

Enormous external debt

Ideological disputes and political arrangements prevented all the elected governments, parliaments, and presidents since 2011 from tackling the real sources of the crisis.

Tunisia’s total external debt today exceeds $40bn.

In the short term, the newly appointed government has to deal with a budget hole of more than $3bn for the remaining period of 2021, said Georges Joseph Ghorra, of the International Finance Corporation (IFC).

Ghorra, IFC’s Tunisia country manager, warned this budget hole “could get bigger” because of the dinar’s fall and the rise of oil and wheat prices on international markets.

Filling this gap requires a complementary budget law and a parliament to debate and vote on it, which is not the case today in Tunisia.

Until the end of the current year, Tunisia needs to borrow 15 billion dinars ($5.3bn) for salaries and debt repayments.

Ridha Chkoundali, a financial expert and university lecturer, links the financial crisis to “the post-revolution economic situation”.

“The public sector has supported the biggest part of the social unrest while the private sector has shrunk due to investors’ fears from political and security instability,” said Chkoundali.

Samaali explained that Tunisia “inherited the biggest part of this debt, $22bn, from the Ben Ali era”.

“Debt instalment repayments and considerable par increase for public workers since 2011 have contributed to the current situation,” Samaali said.

“The different governments that followed the fall of the Ben Ali regime were compelled to regularly borrow money to pay the older debts.”

How July 25 aggravated the crisis

Since his election in 2019, President Saied has added more problems to Tunisia than he brought solutions.

Promoting populist politics and one-man rule, Saied does not believe in foreign assistance to Tunisia and rejects international cooperation.

In May 2020, while on a visit to France, Saied shocked Tunisians and others when he declared the situation in Tunisia is “not good for foreign investment”.

He even slammed the work of international institutions and rating agencies. “The rating agencies cannot give us any grades they want. We are not their students and they are not our teachers,” the Tunisian president said.

As talks with the International Monetary Fund over a third loan were suspended after Saied’s measures, Moody’s recent downgrade of Tunisia’s credit rating to “C” shed light on the present and future repercussions of Saied’s power grab last July 25.

“This downgrade did not surprise me and it means that Tunisia urgently needs deep, structural reforms,” explained Samaali.

“Without these economic reforms, Tunisia will enter an unprecedented crisis and will be soon unable to get new loans unless at very hard conditions.”

‘A clear road map’

Chkoundali noted the international rating agencies – such as Moody’s, Standard & Poor’s and Fitch Ratings – are closely watching political developments in Tunisia.

“[They] take into consideration the political aspect and use scientific data to assess and rank the countries,” he said.

“Saied’s comments about the need to change the sovereign ratings approach of international rating agencies are not based on any scientific principle. Saied has to set a deadline for exceptional measures and disclose a clear road map for the period to come.”

At the economic and financial level, Chkoundali urged new Prime Minister Najla Bouden Romdhane’s government to “do their best to convince the International Monetary Fund to relaunch negotiations with Tunisia” on new instalments.

Internet Explorer Channel Network
Asia's Tech News Daily
News Related

OTHER NEWS

Austrian police arrest 15 suspected people smugglers

© Provided by dw.com Austrian police have arrested over 330 people smugglers so far this year Austrian police have arrested 15 people accused of being part of a criminal group ... Read more »

Delhi's 12-day streak of no Covid-19 death ends as one succumbs to infection

© Provided by Hindustan Times Delhi reported 27 fresh Covid-19 cases on Saturday. (Sanjeev Verma / HT Photo) Delhi on Saturday reported death due to coronavirus disease (Covid-19) after a ... Read more »

Omicron strain: List of countries that have reported new 'variant of concern' of COVID-19

© Provided by DNA The new COVID-19 ‘variant of concern’ named Omicron by the World Health Organisation (WHO) has created an atmosphere of uncertainty related to transmissibility, vaccine effectiveness, and ... Read more »

Amid Omicron variant threat, THIS is how Indian states are gearing up with necessary measures

© Provided by Pinkvilla World Health Organization renamed B.1.1.529 strain of the coronavirus that emerged from South Africa as “Omicron”. Although the cases were declining until now, the new variant ... Read more »

Face masks MUST be worn in shops and public transport - but NOT pubs

© Provided by Daily Mail MailOnline logo The Prime Minister announced today that face masks will be compulsory on public transport and in shops as part of his crackdown to ... Read more »

Ahead of S-400 Triumf missile system delivery, China monitors India's defence preparedness

© Provided by Zee News As the date of delivery of S-400 Triumf surface-to-air missile systems from Russia to India approaches, China’s concern is growing. China is constantly monitoring India’s ... Read more »

Dr. Jitendra Singh launches Covid vaccine delivery by drone

© Provided by The Statesman Dr. Jitendra Singh launches Covid vaccine delivery by drone Launching the Drone driven aerial delivery facility to transport COVID vaccine, as well as emergency medicines ... Read more »

Part of an iconic London landmark is being turned into a bar

London is home to some seriously quirky drinking spots, from the prison bar at ‘Alcotraz’ to the Wild Western experience at East London’s Moonshine Saloon. And now London has got ... Read more »

SWS: 45% of Filipino families rate themselves poor in September

© Social Weather Stations SWS: 45% of Filipino families rate themselves poor in September 2021 A new Social Weather Stations (SWS) poll found 45% of Filipino families considered themselves poor ... Read more »

Loose Women star Stacey Solomon shows off new hair look

© ITV Loose Women star Stacey Solomon has debuted a new red hairdo — reminiscent of Disney’s The Little Mermaid. Loose Women star Stacey Solomon has debuted a new ‘do ... Read more »

A new, different wave of the opioid epidemic is here — and it involves fentanyl

The spike of drug overdose deaths this year and last year has many drug abuse and addiction researchers, doctors and health officials worried about a growing trend among overdose victims ... Read more »

Three killed during Storm Arwen as 100mph gusts cause major disruption

Three people have been killed as Storm Arwen brought gusts of almost 100mph, causing road closures, train delays and power cuts across the UK. © PA Wire Autumn weather Nov ... Read more »

Queensland Human Rights Commission flooded with inquiries due to Covid border confusion

Photograph: Jono Searle/AAP Commissioner says lack of detail has ‘created a vacuum where misinformation is able to be spread’ Get our free news app; get our morning email briefing The ... Read more »

They Died From COVID. Then the Online Attacks Started.

FILE – In this file photo dated Friday, April 23, 2021, the Facebook app is shown on a smartphone, in Surfside, Fla. Facebook’s parent company, Meta, says it will remove ... Read more »

Body of missing Montana man discovered Friday morning near Lowman after vehicle crash

The body of a Montana man who had been missing for more than two weeks was discovered Friday morning in Boise County, a few miles south of Lowman, according to ... Read more »

Accused rapist taking case to trial

Nov. 27—SUNBURY — A man accused of raping a 9-year-old girl wants to take the case to trial in Northumberland County Court. On Monday, Jose Figueroa-Cante, 36, of Northumberland, was ... Read more »

Afghan media collapsing after Taliban takeover, report says

The media industry in Afghanistan has collapsed since The Taliban resumed power. WAKIL KOHSAR/AFP via Getty Images The media industry in Afghanistan has collapsed with the return of Taliban rule. ... Read more »

Boris Johnson is ‘absolutely confident this Christmas will be better than last' amid new Omicron Covid variant fears

BORIS Johnson told the nation that he is “absolutely confident this Christmas will be better than last” amid fears over the Omicron Covid variant. Introducing new Covid restrictions, the PM ... Read more »

'Unbelievably awkward!' Johnny Depp was not happy with one Pirates of the Caribbean scene

In 2003 Disney introduced the world to Captain Jack Sparrow in the first Pirates of the Caribbean film, The Curse of the Black Pearl. Johnny Depp played the swashbuckling rogue ... Read more »

Biden slammed for $139K tree lighting as US struggles with inflation

© Provided by Daily Mail MailOnline logo The White House received backlash for shelling out $139,000 for this year’s Christmas tree lighting ceremony, topped with an additional $171,000 for the ... Read more »

Svenskeren says he hasn't found a new team for the League 2022 season

© Provided by Dot Esports After an extensive League of Legends career, veteran jungler Svenskeren couldn’t find a roster to join for next year, he revealed on Twitter today. It ... Read more »

Apex Legends Players Escape Storm Point Using Horizon Glitch

Storm Point arrived in Apex Legends as part of the Season 11 update, and the Gravity Cannons distributed all over its have proven popular points of experimentation. Fittingly, the gravity-focused ... Read more »

When Does the Overwatch Christmas Event Start?

When does the Overwatch Christmas event start? Overwatch’s Winter Wonderland event has recurred every year since the game’s release all the way back in May 2016. The event always brings ... Read more »

Amy Childs nails winter chic in thigh high boots and fur coat

© Provided by Daily Mail MailOnline logo Amy Childs looked effortlessly stylish as she took her daughter, Polly, four, to Shrek Adventures on Saturday in London. The TOWIE star, 31, ... Read more »

I'm a Celebrity cancelled for weekend as Storm Arwen damages show's TV production base

© Provided by The i The celebrities taking part in the show are safe and remain in the castle, ITV said (Photo: ITV/PA Media) ITV’s I’m a Celebrity…Get Me Out ... Read more »

‘It's coming': New York governor declares state of emergency over new Omicron variant

© Mary Altaffer/AP New York governor Kathy Hochul speaks at the Chinese Benevolent Association on 10 November – Mary Altaffer/AP The state of New York has declared a new public ... Read more »

Dua Lipa, Victoria Beckham and Kourtney Kardashian target pricey Christmas gifts at fans

Celebrities will be making a right sackload this Christmas from a blizzard of expensive gifts being targeted at fans. Pop’s Dua Lipa, fashion designer Victoria Beckham and reality star Kourtney ... Read more »

ECDC: High risk of the new omicron coronavirus variant spreading in Europe

There is a “high to very high” risk that the new omicron coronavirus variant will spread in Europe, according to a risk assessment from the European Center for Disease Prevention ... Read more »

‘Christmas will not be cancelled' despite tree shortage fears, Americans told

Days after reports of shortages of Thanksgiving turkeys proved premature, the American Christmas Tree Association was moved to promise Americans that “Christmas will not be cancelled”, amid reports of looming ... Read more »

Bryan Adams treated with 'anti-thrombosis' shot after positive COVID-19 test

© Bang Showbiz Bryan Adams has anti-thrombosis shot Bryan Adams has been treated with an “anti-thrombosis” injection after testing positive for COVID-19 again. The ‘So Happy It Hurts’ singer spent ... Read more »

Jimmie Allen's 6-Week-Old Daughter Zara 'Off Oxygen, Breathing On Her Own' Amid Hospitalization

© Getty Jimmie Allen has a lot to be thankful for now that his 6-week-old daughter, Zara, is on the road to recovery. The country singer revealed on Instagram that though ... Read more »

I'm A Celeb... axed all weekend due to 'technical difficulties' caused by Storm Arwen

© Bang Showbiz I’m A Celeb… axed all weekend due to Storm Arwen ‘I’m A Celebrity… Get Me Out Of Here!’ has been axed this weekend, owing to “technical difficulties” ... Read more »

Dame Helena Bonham Carter and partner Rye Dag Holmboe share North London home

© Bang Showbiz Helena Bonham Carter lives with art historian boyfriend Dame Helena Bonham Carter and her partner Rye Dag Holmboe live together and even have “his and hers” house ... Read more »

Onondaga woman and 1-year-old son found safe after having been missing since Tuesday

Sarah Jane Heltzel, 40, and her 1-year-old son Ryan Heltzel were reported missing in the Onondaga area Tuesday, Nov. 23. A missing woman and her 1-year-old son have been safely ... Read more »

1 injured in Black Friday shooting at Washington state mall

TACOMA, Wash. (AP) — Inside a packed Washington state mall gunshots rang out on Black Friday, injuring one person as hundreds of other shoppers hid inside stores. Authorities said the ... Read more »

Police Association asks public to ‘stop filming and start helping' when officers are attacked

The National Police Association is calling on bystanders to step in and help if they see an officer being assaulted rather than filming on mobile phones “in the pursuit of ... Read more »

Drugs-on-cruise: No evidence barring accused's own statement, court says in bail order

A special court here has said while granting bail to an accused in the drugs-on-cruise case that there was no apparent evidence that he was a peddler and had supplied ... Read more »

One lakh Assam government employees to fan out for Covid vaccination completion campaign

One lakh Assam government employees to fan out for Covid Vaccination Completion Campaign which will be undertaken from November 29 to December 5. During this period ministers, MPs and MLAs ... Read more »

'Nowhere near good enough!' Russell Martin slams Swansea City players

Russell Martin slammed Swansea City’s lack of intensity as they were beaten 3-2 by Reading at the Swansea.com Stadium. The Swans twice conceded shortly after scoring as they suffered what ... Read more »

Jack Ross hails Kevin Nisbet and Jamie Murphy as duo end Hibs' losing streak

The duo struck twice in the final seven minutes at McDiarmid Park to turn the game around after Liam Gordon’s first-half opener for the hosts. © Jack Ross celebrates Hibs’ ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic