2023-10-18 11:11:00
It is essential to emphasize that Tunisia managed to avoid a payments crisis this year, even without an agreement with the IMF. Transfers from Tunisians abroad and the performance of the tourism sector have played a crucial role, and foreign currency reserves are now at more reassuring levels. However, some key sectors, such as phosphate, construction and textiles, which were once drivers of growth, are now drags.
What is your vision of the next 2024 finance bill?
It is important to note that preparations for the 2024 finance bill began in March 2023, in accordance with the timetable of the 2019 organic budget law. Recently, during a meeting of the ministerial council, on October 12, 2023, chaired by the head of government, a draft amending finance law for the year 2023 and the draft finance law for the year 2024 were approved. On a formal level, the process seems to respect the deadlines, with the objective that the House of People’s Representatives receives the project, as well as the annexed documents such as the Annual Performance Projects and the Annual Performance Reports of the different ministerial missions in delays.
Regarding our vision of the next 2024 finance bill, it is essential to recall that Tunisia continues to face economic challenges and has not yet started a new cycle of growth, investment, reduction of unemployment and to control inflation. The Tunisian economy still faces a growing trade deficit due to energy dependence and a growing public debt burden. Geopolitically, global instabilities, such as the Russo-Ukrainian war and the instability in the Middle East, particularly in Palestine, do not work in our favor.
From our point of view, the 2024 finance law will be successful if the State manages to effectively manage its expenditure, rationalize it and honor its commitments in terms of debt repayment, both external and internal. The finance law must focus on strengthening resource collection mechanisms, emphasizing tax fairness and combating the informal economy. In this regard, we recommend the use of smart and innovative tools. The finance law must also provide a radical solution to the waste of basic products by reforming a failing subsidy system that has lasted for years. In the current social context, the 2024 finance law must continue to help vulnerable categories by providing social allowances to families in need (Pnafn, AMG1 and AMG2) as well as their children up to the age of 18 .
Tunisia will soon unveil the main orientations of its budget for the year 2024. What, in your opinion, are the crucial objectives for strengthening the economy and improving social well-being?
We do not expect revolutionary measures on the economic front. In fact, the 2024 budget, like the budgets of previous years, will not have much room for maneuver to strengthen public investments, which represented no more than 8% of the budget. The major challenge lies in the difficulty of generating significant growth, given that the growth rate is not expected to exceed 1.5% in 2023, and a rebound in 2024 seems unlikely.
However, it is essential to emphasize that Tunisia managed to avoid a payments crisis this year, even without an agreement with the IMF. Transfers from Tunisians abroad and the performance of the tourism sector have played a crucial role, and foreign currency reserves are now at more reassuring levels. However, some key sectors, such as phosphate, construction and textiles, which were once drivers of growth, are now drags. Agriculture suffered from a catastrophic season, requiring considerable efforts to ensure food security and resilience to shortages, in a context of climate change and scarcity of water resources.
To improve social well-being and stimulate the economy, the 2024 finance law should pay particular attention to the Social and Solidarity Economy (ESS), an area that has an economic, social and environmental impact. The creation of a special cash fund to finance the ESS and corporate citizens would, from our point of view, be a very relevant measure.
How can the executive honor socio-economic projects in the current national and global situation? How can we guarantee the sustainability of economic and social reforms?
Tunisia is at a critical stage in its quest for deep reforms in many areas, from taxation and education to the health system and commodity subsidies. Although the finance law is not responsible for implementing all of these reforms, it can play a vital role in strengthening economic freedoms, reducing bureaucracy, simplifying procedures, fostering creativity and innovation, and by encouraging business.
In 2024, we are fortunate to have a 2023-2025 development plan, a strategy for Tunisia by 2035, as well as an Assembly of People’s Representatives. The finance bill is available for discussion, and we hope that the economic aspect will be widely debated and developed before being validated by the members of the ARP.
What concrete responses to the inflationary, water and social challenges…?
You raised the main economic challenges facing Tunisia, including high inflation in 2023, severe drought and shortage of basic food items. The 2024 finance law must allocate financial resources to guarantee the supply of cereal products, with a need estimated at 2.5 million tonnes of cereals, or a bill of 2,325 million dinars. In addition, the year 2024 will probably require the importation of fodder for animals, with a cost of at least 500 million dinars, to save what remains of the livestock.
To face environmental challenges, the 2024 finance law should strengthen the energy transition by encouraging energy production and improving the energy mix. The completion of the Elmed project, which connects Tunisia to Italy and guarantees a direct current interconnection between the two continents, is crucial. Reducing energy dependence should be a clearly defined objective, because the trade deficit is largely caused by the energy deficit.
How can the government maintain macroeconomic balances and social peace?
Maintaining macroeconomic balances in a crisis context is delicate, because measures such as an increase in tax rates can have a negative social impact. Raising the key rate by the Central Bank to combat inflation can lead to the destruction of jobs and the blocking of investment, thus threatening social peace. Reduction of subsidies, shortage of basic products, depreciation of the dinar and inflation are all problems that can compromise social stability and economic well-being.
However, delaying necessary reforms and guaranteeing a standard of living not deserved by debt will not lead to a lasting solution. It is time for Tunisia to directly address the problems that hinder creation and innovation, to remove undeserved privileges, and to engage in structural and structuring reforms for a just and modern society. Communication and frank dialogue are essential to mobilize the population in favor of reforms aimed at controlling inflation, strengthening the social and solidarity economy, promoting merit and effort, promoting creation and innovation, to establish social justice and guarantee an energy transition and responsible use of available resources.
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