2023-08-19 09:42:27
The restructuring of public companies in difficulty is one of the projects which must be dealt with immediately in order to put them back on track. It is an emergency and a necessity since these entities cannot survive and continue in their economic activities without a real lifeline, and above all without relying too much on the eternal aid and support of the State. Currently, there are financially unstructured companies. They have neither the operating balance nor the long-term balance. It is urgent to act in a profound way.
Most public economic enterprises have been in bad shape for years, trapped in a vicious circle of structural deficits and financial restructuring needs. They are now called upon to design their restructuring and investment plans, the only solution for their rescue. Because most of them are still going through very difficult situations, accumulating deficit results from year to year, with liabilities of tax and parafiscal debts and bank overdrafts. Today, a good number of public economic enterprises are at risk of insolvency. It is in this delicate context that the executive intervened to find the appropriate solutions to ensure their sustainability and safeguard existing jobs, in the first place, carry out strategic diagnoses, identify the strengths and weaknesses of these companies to set the appropriate strategic orientations, on a case-by-case basis.
The reasons for the deterioration of the situation of public economic enterprises are due to internal factors specific to each enterprise and external factors common to all enterprises. Internally, it is more particularly the existence of failures in their system of governance, management, transparency, etc. Externally, it is the difficult international context that predominates. The war in Ukraine and the rise in world prices of basic and manufactured goods and the drought which continues for the fourth consecutive year, added to the slowdown in the world economy, have exacerbated the vulnerabilities of the Tunisian economy and, therefore, the public company, which is already weakened by three years of Covid19. The achievements of the first quarter of 2023, even if they show some signs of improvement, should not hide the many weaknesses which concern in particular the continued decline in investment, the increase in unemployment, the slowdown in foreign trade and the difficulties in mobilizing the external financing resources needed to balance the balance of payments and the State budget.
To cope with all these constraints faced by public enterprises, it is essential to provide them with the means and tools enabling them to improve their performance, both organizationally and financially, by developing medium and long term development plans.
Increase in debts to the state
In Tunisia, most public enterprises are facing financial difficulties which have heightened the concerns of banks. Their debts to the state reached 9.8 billion Tunisian dinars (3.1 billion USD) in 2021, compared to 6 billion TND (1.9 billion USD) in 2019 – an increase of 63% – , according to the annual report of the African Development Bank (AfDB), “Economic outlook for North Africa in 2023”.
Knowing that the State annually grants financial subsidies to these companies. These subsidies reached 5,514 MTD in 2019, divided between operating subsidies (4,859 MTD), investment subsidies (560.150 MTD) and treasury loans and retroceded loans (95 MTD)”.
Renewed optimism
According to the Barometer, EY 2023 of companies in Tunisia, in less than two years, 54% of business leaders believe that the continuity of their activities might be threatened while they were 63% to make this observation in 2021 and 55% in 2020.
This EY 2023 barometer was carried out during a period marked by the impact of the economic, political and social crisis in Tunisia. Despite this difficult context, the responses of the leaders revealed a certain renewed optimism within Tunisian companies, announcing the beginnings of a resumption of their development.
The results of the barometer show that business leaders have shown great resilience. Indeed, in terms of commercial performance, the share of business leaders who have seen an improvement in their business has doubled, from 26% to 56%. Sectoral trends reveal that 65% of financial establishments mainly experienced an improvement in their turnover. According to Noureddine Hajji, Managing Partner EY Tunisia, “the most positive sign remains the integration of the major challenges of business competitiveness. A significant proportion of companies seem to be involved in projects to digitize their activity”. For his part, Sami Zaoui, Partner at EY Consulting Tunisia, specifies that “the 2023 edition of the business barometer once once more confirms the capacity of Tunisian business, in an environment that is judged by itself, unfavorable, to move forward and reinvent itself”.
The positive anticipations of business leaders, as to the evolution of their activities, “require more visibility, more certainty at the level of public policies and the general policies of governments, so that they can really be transformed into decisions and into investment projects that are likely to lead to job creation and an increase in the country’s wealth,” adds Mounir Ghazali, Partner at EY Consulting Tunisia.
On the other hand, some experts consider that the business climate situation as well as the financial situation of the State do not make it possible to envisage a lasting and significant economic recovery without major structural reforms (in addition to the public finance management measures agreed with the IMF). Structural reforms, the complexity of which, on the one hand, and the support it requires, on the other hand, presuppose a multidimensional process over the medium and long term.
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