US pledges to support Tunisia in facing economic challenges

During a phone call to Tunisian President Kais Saied, US Vice President Kamala Harris “underscored the United States’ sustained commitment to supporting Tunisia’s democracy.”
Wednesday 12/05/2021
Combination photo of Tunisian President Kais Saied and US Vice President Kamala Harris  (Website of US embassy in Tunis)
Combination photo of Tunisian President Kais Saied and US Vice President Kamala Harris (Website of US embassy in Tunis)

TUNIS--Washington reaffirmed its “strong commitment” to Tunisia on Tuesday, at a time when the government in North African is holding negotiations with the International Monetary Fund (IMF) to obtain a financial aid plan that would limit the repercussions of the worsening economic crisis.

During a phone call to Tunisian President Kais Saied, US Vice President Kamala Harris “underscored the United States’ sustained commitment to supporting Tunisia’s democracy.”

“The two leaders reaffirmed the importance of democratic institutions, the rule of law, and fighting corruption, ” said the US president’s readout.

Some Tunisian analysts saw in the emphasis on Tunisia’s democratic institutions” an allusion to the squabbling between heads of Tunisian government branches over prerogatives, leading to an impasse over the formation of a constitutional court and the reshuffling of the cabinet.

The Tunisian presidency said in a statement the two sides discussed the economic, financial and social situation in Tunisia.

The US vice president later tweeted “we stand with Tunisia as it makes the economic reforms necessary to recover from the challenges of the pandemic.”

 

A Tunisian government delegation visited Washington last week for talks with the IMF on a possible $4 billion loan and reforms to eliminate subsidies and reduce the massive public sector wage bill.

Tunisia has pledged to cut its public sector wage bill and replace subsidies with direct support for the needy, according to a government reform proposal written to support talks with the International Monetary Fund.

The proposal also envisages eliminating all general subsidies by 2024 and cutting the wage bill to 15% of GDP by 2022 from 17.4% last year, partly through early retirement and reductions in working hours.

The IMF has previously called on Tunisia to enact economic reforms to reduce chronic fiscal deficits and a large public sector debt, including by cutting its wage bill, subsidies and transfers to state-owned companies.

Spending cuts are highly sensitive in the young democracy, where growing frustration over the economy and poor public services fuelled protests in January, and where powerful labour unions seek to protect workers’ pay.

The proposals to cut the wage bill specify encouraging voluntary redundancy on 25% pay, early retirement packages and offering staff part time work at 50% of full pay.

The plan says it is “essential to rethink the pay system in consultation with social partners,” a reference to the labour unions, particularly by establishing rules for salary increases and bonuses that reflect both inflation and performance.

Tunisia’s powerful General Labour Union (UGTT) has already expressed strong objections to many of the reforms, one of its most senior officials said.

The UGTT has more than a million members and has proven able to mobilise significant opposition to previous governments through strikes, sit-ins and pressure on political parties

“These are unilateral measures that we did not discuss with the government and we were surprised when we read about the details,” UGTT deputy secretary general Sami Tahri said last week.

Tahri added the government should focus on raising more revenue by targeting tax evasion rather than measures that he said would target state employees and renewed a UGTT demand to start negotiations on another public sector pay rise.  He rejected the notions that the Tunisian public service workforce needs to be cut. “We would need to recruit about 50,000 new employees for the health and education sectors,” he said.