2023-04-19 09:03:24
In a context of public finance crisis, recourse to the IMF is essential. Especially since the search for new sources of financing implies a change of geostrategic positioning, which is, for the moment, politically difficult if not impossible.
Do you think that the current level of Tunisia’s public debt is really worrying?
According to data from the Central Bank of Tunisia (BCT), Tunisia’s stock of external debt rose at the end of 2022 to 132.5 billion dinars, representing nearly 93% of GDP. A truly worrying level in a context of economic stagnation, inflation that exceeds 10%, high unemployment (nearly 17%) and a proven trade deficit. The year 2023 promises to be difficult at all levels.
What is your analysis of the current situation on Tunisia’s recourse to the IMF? Government talks with the IMF began months ago. Are we moving, in the long term, towards this indebtedness?
Although the IMF has already given its agreement in principle (a financing of 1.9 billion dollars), the talks have been going on for a few months and are likely to take more time. This is largely linked to two factors: the first, external, associated with recent geostrategic dynamics and rivalries. Faced with the rise of “emerging powers” (Brics) and their ascending presence in the region, the Western powers (USA and EU), beyond the questions of “reforms”, seek to instrumentalise “financial aid” to preserve the “traditional” alliances and avoid any swing of the countries of the region, in this case Tunisia, towards the nascent bloc.
The second factor, internal, lies in the impasse in which the political power in place finds itself. On the one hand, in a context of public finance crisis, recourse to the IMF is essential. Especially since the search for new sources of financing implies a change of geostrategic positioning, which is, for the moment, politically difficult if not impossible.
On the other hand, obtaining financing from the IMF and accepting its conditionalities (elimination of subsidies, privatisation, etc.) risks exacerbating the social crisis and eroding the legitimacy of political power. A concern expressed by the Minister of Foreign Affairs, N. Ammar, to the Italian daily La Republica on 4/4/2023. Regarding the negotiations with the IMF, the minister argued that it is not possible for Tunisia to undertake “radical reforms” in a short period as required by the IMF and we must think of “social justice”.
In your opinion, is resorting to external debt really a good decision to take today to resolve the country’s financial situation?
Tunisia has been in debt for decades, particularly with international institutions (World Bank and IMF). The facts show that the situation continues to worsen. With the conditionalities and policies imposed by these institutions, each indebtedness generates the conditions for a new recourse to external debt and the country finds itself caught in the trap of cumulative indebtedness.
For example, we are currently negotiating a loan of 1.9 billion dollars spread over four years. At the same time, the deficit in the trade balance reached 12 billion dollars and which will of course be filled in foreign currency and therefore largely by external debt. The desired loan only represents barely 15% of the deficit. I think it makes more sense to take steps to reduce the trade deficit than to negotiate a new loan. All the more, a constant of the IMF’s receipts is to further liberalize, which is likely to further widen the external deficit and involve new loans. All in all, recourse to the IMF will only reproduce the same situation and plunge the country into a vicious circle of indebtedness.
What risks does the country run if the external debt is too high? How do you think you can set limits to its accumulation?
More indebtedness implies a total loss of sovereignty, a submission to the dictates of international institutions and the demands of international capital. Of course, it is the poor and middle classes who will bear the cost. To guarantee the repayment of debt service, the government will be increasingly obliged to compress its expenditure and it is economic and social expenditure that will be affected. The consequences will be: wage and recruitment freeze, elimination of subsidies and reduction of social assistance, deterioration of public services, etc.
Like, I already explained in a previous interview (The Press of 17/11/2021), getting out of the circle or the trap of indebtedness implies a break with the dominant model, in particular its neoliberal variant. It is regarding designing a new model with, as pillars, social justice and national sovereignty, a model that gives priority to the productive sectors.
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