Country Report Tunisia April 2011

Economic policy: Emergency measures to boost growth announced

The interim government has unveiled a 17-point emergency action plan to revitalise the economy. At end-March Mr Essebsi said that the economy was growing at a rate of between 0% and 1%; in February the government had been forecasting growth of 2-3% this year, while the 2011 budget was predicated on growth of 5.4%. Unemployment is rising, the financial sector is weakening because of rising defaults, and the external payments deficit is growing as foreign investment declines and tourist receipts dip.

The action plan includes measures to create jobs, support firms damaged by the unrest, provide financial incentives for investment, especially in the underdeveloped interior, stimulate the financial markets, boost capital investment and support exports. Among specific measures taken, customs duties on imports of capital equipment have been halved to 6%; exporting firms have been allowed to sell half of their goods and services on the local market in 2011; firms damaged by the unrest will have their social-security payments reduced, tax payments rescheduled and debt interest subsidised. At the end of March Banque centrale de Tunisie (the central bank) moved for the second time this year to boost liquidity in the economy by reducing the banks' reserve requirement, by 0.5% to 4.5%. The bank had already reduced the reserve requirement from 7.5% to 5% at the end of February, releasing some TD360m (US$252m) for them to lend to local businesses.

According to the employment and training minister, Said Ayedi, under the action plan 20,000 public-sector jobs will be created in July, 20,000 young people will be recruited into the armed forces and 20,000 jobs will be created in the private sector, although this may be over-optimistic given the weakness of the economy. Mr Ayedi said that Tunisia was negotiating with its European allies to provide 4,000 jobs abroad. Additional training programmes would be provided for 10,000 graduates, and some 50,000 unemployed graduates would each be given TD200 (US$140) a month to help them find jobs. The ministry had received 127,000 applications for this scheme by the end of March. Mr Ayedi said that without urgent action unemployment could rise from some 520,000 now to 715,000 by July. Political unrest had caused the loss of 4,000 jobs, he said, and another 80,000 jobs could be lost in the next four months if the wave of strikes, sit-ins and unrealistic pay demands did not end. He said that thousands of Tunisian workers had returned from Libya (some estimates put the figure as high as 70,000), adding to the jobless total, and another 80,000 graduates would enter the job market this summer.

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
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