Tunisia wrestles with budget pressures amid political manoeuvring
Tunis - Tunisian Development, Investment and International Cooperation Minister Fadhel Abdelkefi warned parliament that, if progress was not made in revitalising the economy, the country would be heading to a financial crisis that would put government workers’ salaries at risk.
Abdelkefi, who is also interim finance minister, held up a copy of the treasury current account of the Central Bank during his July 27 address.
“This document had never been looked at by any economy or finance minister since the independence of the country 60 years ago,” said Abdelkefi during the address. “This sheet of paper has become the most important document in the Finance Ministry now.”
The treasury current account is a metric that tracks how much cash is available for government spending, including funds used for public salaries.
Abdelkefi has been rallying support from parliament to request a loan from the European Union to go towards paying public salaries for August and September.
“We are in a dangerous zone and it is time to stand up for Tunisia,” Abdelkefi said. “Tunisia’s business model cannot continue the way it is.”
In the five years leading up to 2016, state spending in Tunisia grew 50% but economic growth inched up only 1% per year. This caused the country’s debt-to-GDP ratio to jump to 75%, as much of the government’s borrowed money went to paying salaries and importing consumer goods.
Resistance inside and outside parliament to the government’s efforts to improve growth, fight graft and ensure security and social stability is being fuelled by apprehension among some politicians. They are wary of any successes that could bolster Tunisian Prime Minister Youssef Chahed’s popularity and help him upstage rival politicians.
Tunisia’s failure to capitalise on its economic potential underlines the challenges ahead: From 2011-16, worker productivity dropped 20% and administrative productivity fell 50%, the government-run National Institute of Statistics stated. In Morocco, administrative productivity jumped 12% in the same period.
There are some signs of progress, analysts noted.
“While the situation related to public finances is not bright, the part of the economy in which private sector performance is good, with men and women working hard and innovating, is rebounding,” said Abdelkefi, noting that private-sector tourism and the phosphate sector were growing.
“The growth for (this year’s) first quarter is promising,” he added.
Chahed acknowledged that Tunisia has struggled but he said he remained hopeful.
“For 2017, we anticipate 2.5% growth, which is not enough but coming from 1% last year and 0.7% in 2015, it’s good progress,” he said in an interview with Time magazine.
“And tourism is back. Almost all of the European countries have lifted their travel ban on Tunisia so lots of tourists are coming from France and from Europe. This is very positive for a country like Tunisia where tourism is 7% or 8% of GDP.”
Analysts said a major threat to economic growth is political infighting, which is likely to intensify ahead of the country’s elections in 2019. Rached Ghannouchi, head of the country’s main Islamist party, Ennahda, recently criticised Chahed over what he speculated were his political ambitions.
“The fear is that Chahed will eye the presidential elections in 2019,” Ghannouchi said in an August 1 television interview, suggesting that Chahed should be forced to choose between continuing as prime minister or planning to run for president.
Opinion polls rank Chahed as the most popular politician in Tunisia, mainly due to his war on corruption that has cracked down on dozens of powerful business figures suspected of graft.
Chahed’s popularity prompted concerns from political rivals who worry about being upstaged by the young prime minister, analysts said.
“Only manoeuvring and plotting for preparations for the post-Beji Caid Essebsi period dominate the minds and attention of politicians whether they are in the opposition or the government,” said Al Chourouk daily editorialist Khaled Haddad.