Tunisia’s new agreement with the IMF is just two months away from becoming operational. The government, however, is far from being prepared to navigate what follows once it begins the precarious task of dismantling the subsidies system which covers basic goods and hydrocarbons. Rather than alleviating pressure on the country’s most vulnerable groups, it is likely to incite anger and indeed set off the social time bomb that it had hoped to disarm.
« Dire » is the word that IMF spokesperson Gerry Rice used to describe Tunisia’s economic and financial situation. During an online press conference on May 19, Rice urged the Tunisian government to pursue a reform program as a way out of its current impasse. But is a debt-fuelled solution the only way out? Several NGOs do not believe so, and propose alternative solutions to pull the country out of the crisis.
The Tunisian market for secondhand clothing, known as « fripe », emerged after the second world war. The industry has since become ingrained in the country’s socioeconomic fabric, anchored in consumer habits and constituting a livelihood for more than 200 thousand individuals. But the sector is facing an unprecedented crisis.
The war between Russia and Ukraine threatens to weigh heavily on Tunisia’s fragile economic balance. Soaring oil prices will aggravate the burden, with the barrel price having far surpassed the 100 USD mark, not to mention the estimated 75 USD on which the country’s budget was based. Meanwhile, the tourism sector is likely to suffer for want of Russian visitors who once filled Tunisian beaches and hotels.
There will be no fiscal revolution for Tunisia in 2022 as many might have once hoped. The country’s new finance law remains loyal to the same business model under which physical persons, including the most disenfranchised segments of the population, contribute a significantly larger portion to tax revenues than do businesses.
In early May, an official delegation to Washington D.C. met with International Monetary Fund (IMF) officials for discussions on a new loan program for Tunisia. According to a leaked, confidential document allegedly produced by the Tunisian government which Bloomberg reported on (but did not publish), the government proposed removing food and energy subsidies as part of these discussions. In May and June, the prices of several consumer goods, including subsidized sugar, were raised or increased. Some have claimed these price increases were meant to “appease” the IMF as part of the ongoing loan discussions.
The government began raising donations from Tunisians to help fight Covid-19 in March, but now many are concerned about how that money—just over 200 million Tunisian Dinars (TND)—has been spent. Several high level officials have issued statements that appear to contradict each other regarding how the money has been spent or whether it has been spent at all. Activists and civil society groups claim that officials are providing little transparency on this issue, and some have alleged that Covid-19 funds have been misappropriated and stolen.
Many Tunisians buy their goods from small shops. But before those goods reach local shops, they pass through a series of middlemen who shape the final price. In the groceries sector, this includes wholesalers and “dawarjis”—independent transporters with vans who buy goods from wholesalers and sell them to small retailers. A new startup is trying to sell an alternative supply chain system using online tools, but many prefer the way business is done currently.
On March 16, Tunisian Prime Minister Elyes Fakhfakh announced a series of decisions that were not without economic consequences. Beyond the closure of air and land borders (except to goods and to flights carrying Tunisians returning from abroad), Fakhfakh announced the cancellation of all cultural, scientific and sports events. These new measures were implemented in addition to the 4pm closing time imposed on cafés, restaurants and bars. The pandemic is taking a toll on the global economy, and Tunisia has not been spared.
Another hot summer in Tunisia gave way to teachers’ strikes in the fall, while winter follows suit with plans for a general strike on January 17. In this context, on December 10 the government adopted the Finance Law of 2019, a package of measures that perpetuate fiscal injustice, aiming to handle the country’s growing deficit by reaching into the pockets of those most impacted by economic crisis. Ahead of the 2019 elections, the new public budget was passed amidst a rejection rate of 30% in parliament, suscitating a new wave of popular and political rejection in the most recent test put to the government of prime minister Youssef Chahed.
This publication file is in the framework of the activities of the network of independant media on the Arab world. The regional cooperation is made by Al-Jumhuriya, Assafir Al Arabi, Mada Masr, Maghreb Emergent, Mashallah News, Nawaat, 7iber and Orient XXI.
In recent years, Egyptians have experienced a noticeable decline in their standard of living with the devaluation of the national currency and at the same time a substantial rise in the cost of goods and services. Something quite unusual in a country where over the past few decades changes have always been gradual. Egyptians interpret their difficulties as a consequence of the implementation of the “Economic reform” aimed at bringing the country out of the current crisis with a series of austerity measures decided by the IMF.
In recent months, Lebanon has been alive with rumours about a forthcoming devaluation. In mid-September, the governor of the Central Bank, Riadh Salameh was obliged to officially deny that he was ill and had to resign and Michel Aoun, the President of the Republic, also had to declare that the Lebanese pound was in good health and that the country was not on the road to bankruptcy. For every Lebanese these factors are indeed closely related since all know that the country is deep in debt.
The demonstrations in the summer of 2018 put the economic policies pursued since the late 1980s back at the heart of public debate in Jordan. The dispute has opened up a political space that had disappeared since the failure of the “November” 2012 conflagration, and brought the issue of taxation back to the forefront of the discussions. Extending the debate to the global economic approach has at least made it possible to question several central points of the official discourse, in particular the recurring subject of debt reduction.
The second Intifada used a large network of parallel and informal financial assistance to provide material and logistical support to the Palestinian resistance. That is why Israel has imposed reforms on the Palestinian Authority that have played a decisive role in its control strategy. Presented as a step towards good governance and the fight against corruption, they contributed to the halt given to the Intifada after the death of Yasser Arafat.
Despite the supposedly opposing political systems in place in Egypt and Syria since the 1970s, the two countries have developed similar economic reforms, particularly since the 1990s. In both cases, and beyond the differences, they allowed the elites to strengthen themselves, and the dictatorship to continue.
In North Africa, central banks independence from political powers is a matter of debate. It faces many obstacles and also raises countless criticisms from those who fear that countries will abandon their national sovereignty.
In November 2016, Tunis hosted an international conference, Tunisia 2020. Co-organised by the Tunisian, French and Qatari governments, its ambition was to garner from the “friendly countries” in attendance investment pledges for projects contributing to growth and job creation as well as significant financial support. The problem is that the promised financial support appears never to have been forthcoming, and the Tunisian government has been obliged to go into debt on the financial markets. This situation has prompted several observers to wonder publicly: “Where are Tunisia’s friends?”
