War in Ukraine: Tunisia in the eye of the storm

« Vu the dependence on its cereal imports [blé dur, blé tendre, orge, etc.] and the unprecedented surge in oil prices, Tunisia is forced to find other forms of self-immunity in the face of the potential negative repercussions of the conflict in Ukraine, one of Tunisia’s main suppliers. The caveat is from the Arab Institute of Business Leaders (IACE). In a report entitled “The war in Ukraine: impacts and measures to be taken” presented Wednesday, March 9, in Tunis, the IACE called on the Tunisian government to set up a crisis unit to determine the options to be undertaken urgently in regarding the diversification of cereal supply sources.

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Tunisia, very dependent on foreign countries for its food

For the IACE, the current problem is the dependence on cereal imports, but above all a high risk of solvency. Indeed, Tunisia imports 84% ​​of its common wheat needs, no less than 40% of those (needs) in durum wheat and 50% for barley. And it should be noted that the country’s storage capacities are limited to only three months.

Yesterday, President Kaïs Saïed reacted by declaring “war” on speculators in the face of a shortage of basic food products such as semolina and flour in a country already in the grip of a serious political and financial crisis. In this sense, the government is working on new legislation providing for sanctions that can go as far as the imprisonment of the traders involved, and which will be the subject of a decree, according to the presidency. Tunisia has recorded in recent weeks a shortage of many staple foods such as rice, semolina, sugar and flour. The authorities regularly announce the seizure of quantities of these food products in illegal warehouses.

According to the figures presented in the IACE report, the current surge in the price of wheat and cereal products might further increase the compensation charge to the tune of 1.3 billion dinars (regarding 439 million dollars). additional costs, knowing that the charges provided for in the State budget are of the order of 2.2 billion dinars (743 million dollars) for the compensation of basic necessities.

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Food security under threat

Ferid Belhaj, World Bank Group Vice President for the MENA region, confirms the challenges ahead. The conflict in Ukraine “will directly affect several economies in the MENA zone [Moyen-Orient et Afrique du Nord], including Tunisia, whose economy depends on cereal imports, particularly wheat,” he commented. “This crisis would be capable of disrupting the supply of cereals and oilseeds, but above all of leading to soaring both food prices and the costs of national agricultural production”, he noted in a blog of the World Bank. “By opting for higher energy and fertilizer costs, or a combination of the two in some countries in the region, such as Tunisia, the World Bank is determined to strengthen its support for agrifood production and marketing. countries, in addition to the management of agricultural risk and food reserves,” reassured Mr. Belhaj. The global financial institution, he added, “would always be ready to provide targeted technical and analytical assistance, primarily for the benefit of the most affected countries in terms of fiscal sustainability, food security, trade monitoring and risk management. as well as subsidy reform”.

In the absence of compensation, warn the experts of the IACE, the current prices of cereals internationally might cause a 20% increase in the price of pasta compared to current prices. “It will thus be vital to enlighten public opinion as to the delicacy of the situation and its subsequent repercussions. […], it will be necessary to revise food habits avoiding waste and, above all, to pass the general interest to the detriment of particular interests, ”we read in the report. Among the alternatives is the orientation of the country’s agricultural water resources towards cereal crops to hope for the success of future harvests.

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Several possible solutions

The second part of the IACE report concerns oil prices on the international market following the conflict in Ukraine and a possible shortage of global supply. The IACE recalls that the Tunisian State budget for 2022 was established on the basis of a barrel price of 75 dollars. This is an additional charge for the compensation fund of regarding 7 billion dinars (2.3 billion dollars). This additional burden, explains the IACE, will directly affect the state budget, which will be forced to raise prices at the pump. Consequently, an entire circuit will be systematically affected, knowing that two thirds of the increase will be at the level of road fuels and the remaining third will concern industrial consumption, hence a direct effect on the price of electricity and the competitiveness of companies.

In view of this inventory, the IACE proposes to the Tunisian government to opt for supplies of essential products at the expense of secondary products. The release of aid from the European Union, 300 million euros for budget support in Tunisia, would certainly be one of the emergency responses to deal with the current situation.

In addition, the Tunisian authorities must speed up negotiations with the World Bank and the IMF to obtain exceptional emergency aid which might reach 1 to 1.5 billion dollars for the year 2022, still according to the IACE.

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Tourism also impacted

Another cause for concern: “The conflict in Ukraine will certainly have repercussions on the tourism sector in Tunisia,” Tunisian Tourism Minister Mohamed Moez Belhassine said on Wednesday. Speaking on the sidelines of a national forum on domestic tourism, the minister however assured that his ministry “will ensure that the shock wave of this crisis is overcome”. “Several flights to Tunisia have been cancelled, especially since the number of Russian tourists will be in remarkable decline”, regretted the Tunisian minister. According to him, a crisis unit is already in place within the Ministry of Tourism, its main mission is to monitor and monitor the effects of the conflict in Ukraine. “It must be said that this unit is in direct contact with most tourist operators operating in Russia and Ukraine as well as in Eastern and Central Europe”, he indicated. According to the figures presented by Mr. Belhassine, 630,000 Russian tourists and 30,000 Ukrainians set sail for Tunisia in 2019.

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