Country Report Tunisia April 2011

Outlook for 2011-15: Policy trends

The interim government will seek to ensure that there is as little disruption to business as possible going forward and will also concentrate on boosting economic growth. It announced an emergency plan designed to boost growth by creating jobs; support firms damaged by the unrest; provide financial incentives for investment; and support exports. The challenge will be to ensure that economic growth is high enough to meet the demands of protesters for more jobs and higher standards of living, which will only be achieved through the market-oriented policies initiated by the old regime. However, the government will have to work hard to restore confidence in these policies by ensuring that growth is more evenly distributed. In light of the disruption to the economy, the budget will need to be revised. Nevertheless, the government will press ahead with its emergency plan, increasing the emphasis on reducing unemployment, particularly among graduates. In the interim period, it will increase benefits and subsidies on basic food items to lessen the financial burden on the unemployed. Tourism and foreign direct investment (FDI) will remain the main areas of focus for economic policy.

Mr Ben Ali's family, especially members of the Trabelsi family of his second wife, Leila, and his son-in-law, Mohammed Sakher al-Materi, had become increasingly rapacious, taking commanding stakes in virtually every business sector. The new government will face some tricky political and legal choices as it grapples with this commercial and financial legacy. In some cases this could entail nationalising stakes held by members of the Ben Ali and Trabelsi clans, and offering them to the public or to strategic investors at a later date; in others it may involve revoking contracts or licences and retendering the relevant projects. With the rise in importance of trade unions, foreign businesses are concerned whether the new government will be able to maintain the business-friendly policies adopted by the former regime and will honour deals negotiated under the old regime, especially ones that involved companies owned by members of Mr Ben Ali's family and close associates.

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
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