Transcript
Tunisia is a boiling cauldron. It is certain that the Covid-19 epidemic is having a drastic impact on the country on many fronts. But the system put in place after the 2011 Jasmine Revolution, which was praised around the world as paving the way for the first democracy in the Arab world, has simply stalled. While the economy is facing unprecedented challenges, the very negative effects of such challenges could bring to power not only the Islamo-conservative movement that already attempted to govern in 2011 and failed, but also the party that ruled under dictator Ben Ali, both of which are a bad idea for Tunisia.
From the get go, the Tunisian government is in trouble because it needs nine billion dinars (2.8 billion euros) to close the 2020 Budget loop and is having hard time finding the money. Furthermore, it needs an additional 20 billion dinars (6 billion euros) for its 2021 budget. Tunisia is facing a tough economic crisis, made worse by the Covid-19 pandemic. Making the situation even more difficult, Tunisia’s sovereign rating is at its lowest and therefore, the country would be paying higher interest rates if it is to raise money on the international financial market.
The latest news on this front comes from rating agency, Fitch Ratings, which has just downgraded the outlook for the Tunisian sovereign rating from stable to negative, in an assessment published on 23 November 2020. The agency says the negative outlook reflected a worsening of fiscal liquidity risks due to a sharp deterioration in public finances, as a result of the coronavirus pandemic. The agency added that the budget deficit will widen to reach 10.5% of GDP in 2020, compared to 3.3% in 2019.
The technocratic cabinet of Prime Minister Mechichi has taken over government at a difficult time for Tunisia, economically and financially. The 2020 complementary finance law already requires nine billion dinars (2.8 billion euros), despite the two billion euros obtained in June and July in the form of aid and loans to deal with Covid-19.
The situation is all the more difficult as the latest economic data suggest. Tunisia benefits little from its natural resources, with a phosphate production which has never exceeded, since 2011, half of the eight million tons of 2010, leading to the virtual bankruptcy of the Gafsa Phosphates Company, which employs a staff two and a half times higher than in 2010.
Oil activity is also at its lowest, after more than three months of protests and sit-ins in producing areas (from July to November), depriving Tunisia of revenues exceeding 300 million dinars (100 million euros). All this means that the Gross Domestic Product (GDP) would end the year at -7%, which is an unprecedented development since the establishment of a budget in Tunisia.
Compounding the problem, the Central Bank of Tunisia (BCT) does not agree with the government’s economic plan. Called to speak about the economic and monetary situation before the national assemby, the governor of the central bank, Marouane Abbassi, openly criticized the economic policies of the successive governments. He stated that “It’s not normal for the government to go into debt to pay salaries. Loans are used to invest and create wealth. Such an attitude does not help the economic recovery.” Abbassi has so far resisted the calls for printing more money in order to finance the supplementary budget bill. He said “Our role is to maintain the currency and the purchasing power of the citizen.” However, faced with pressure from various lobby groups, the BCT is likely to cave in. It has demanded a written note from the National Assembly to justify such actions before it potentially proceeds. The move may be necessary because there is a shortage of 20 billion dinars (six billion euros) to close its 2020 budget, with the most optimistic economic projection considering 1% GDP growth compared to 2019. But the reality is that any country that ends up showing positive growth this year is likely a fake number given the impact of Covid-19 on economic activity. But where to get the money? Tunisia has been increasingly unpopular with international institutions and risks being classified as a bad payer, even if, until now, it has never failed to fulfill its obligations.
Domestically the situation is no better. Impatience within the population is running high and it is at its highest on the eve of the 10th anniversary of the Jasmine Revolution. Citizens are losing hope, and many say they do not expect things to change, except to worsen, in particular in the job market with growing unemployment. Officially, the unemployment rate rose from 15% to 19% of the active workforce. The actual number if obviously bigger than what the government publishes. Regions that have long struggled with high levels of poverty have worsened. And officials at the country’s biggest trade union UGTT blame corruption for crippling the economic and administrative sectors.
Popular anger has recently expanded into street protests, with demonstrations spread in the country’s interior to demand work and investment in the traditionally marginalized region. AFP news agency reports that the latest protests in the country’s centre and south come after residents of the southern city of Tataouine reached a November 7 deal with the government to end a months-long blockade of an oil installation. Promises by the government to create economic projects and jobs did not appease the population, and in the central region of Kasserine, residents have been blocking the Douleb oil field, demanding a halt in production to force the authorities to honor previous promises towards their region. AFP says production at the field was suspended on Monday, 23 November, the latest in a string of similar blockades. In Gabes, in the southeast, hundreds of demonstrators have been holding a sit-in in front of the city’s industrial zone, AFP reports. Protesters blocked roads and hobbled industrial activities, with anger against the government running high.
On 24 November, residents demonstrated in the delegations of Métlaoui and El-Ksar, as well as in Moualrès, where the finance office was raided and burglarized. Protesters closed several roads to denounce the policies of Prime Minister Hichem Mechichi, which they deem “ridiculous and insufficient”. Riot police were deployed to prevent an increase in violence, especially in Métlaoui where tension has reached its peak. Although residents of Gafsa also oppose the government, they also denounced the acts of violence, insisting that they have no connection with the individuals who looted the revenue department.
Unions are also concerned that in the midst of a prolonged economic turmoil, political parties that advocate extremist ideas could be making major gains. In future elections, observers warn that the Free Destourien Party, against which the Tunisians revolted in 2011, and the Islamists of Ennahdha, which brought failed policies right after disgraced dictator Ben Ali left, could eventually be the winners, if the polls are to be believed.
For Tunisia, the situation looks rather grim, but we are all rooting for the country that has the biggest chance of adopting real democracy. The Tunisian experimentation needs everyone’s support. While we do not anticipate Gulf monarchies to come to the rescue, given their traditional resistance against democratic demands in the Arab world, we hope the new Biden administration will find it critically important to support Tunisia. A successful, prosperous, democratic, and peaceful Tunisia could be a blueprint for many other nations to follow.
