Outlook for 2011-15

• It is uncertain whether the third interim government will be able to maintain its position, even though it has been stripped of all members of the former ruling party, the Rassemblement constitutionnel démocratique (RCD).
• Plans to hold the election for the National Constituent Assembly on July 24th have been postponed to October 16th. The assembly will be responsible for rewriting the constitution and organising parliamentary elections.
• At the very least, the delay in the assembly elections will prolong the state of uncertainty and may spark renewed protests. The political situation in Tunisia is likely to remain volatile until the assembly elections are held.
• Islamist parties will try to secure a position in Tunisian politics and government but will be competing against a plethora of new political parties, which have recently been licensed, as well as existing parties.
• The Economist Intelligence Unit expects government expenditure to rise substantially as the interim government implements measures to boost economic growth. The budget deficit will widen to 9.2% of GDP in 2011.
• We expect economic growth in 2011 to slow to 0.8%, slightly lower than government projections. Growth in 2011-15 is forecast to average 3.1% a year.
• The protests will have a negative impact on tourism revenue and trade, causing the current-account deficit to balloon to 10.3% of GDP in 2011, before falling in 2012. The current account will record surpluses from 2014.

Monthly review

• The National Constituent Assembly election has been postponed to October from July. The electoral commission has said it needs more time to prepare for the election.
• The composition of the Assembly has become clearer. It will have 218 seats, including 19 seats for Tunisians living abroad.
• Anti-government protests in Tunis in May have cast greater doubt on the intentions of the interim government.
• There have been inconsistent reports of a gun battle between al-Qaida militants and Tunisian police in May in northern Tunisia.
• Tunisia has managed to secure a large portion of the TD4.2bn (US$3.1bn) in external financing it needs for 2011, in part to roll out its emergency plan.
• The G8 nations have promised Tunisia US$25bn in aid over the next five years.
• Exports have grown strongly year on year in the first four months of 2011.

Tunisia faces a period of instability following the ousting of the president, Zine el-Abidine Ben Ali, in mid-January as a result of a popular uprising. The public's trust in the interim government remains fragile, as shown by the anti-government protests in the capital, Tunis, in May. This trust will be further tested following an announcement delaying the National Constituent Assembly election from July to October. At the very least, this will prolong the state of uncertainty but may also result in renewed protests. The weakening security situation also leaves Tunisia open to attacks by militant groups such as al-Qaida-Tunisian police fought a gun battle at a checkpoint in northern Tunisia with members of al-Qaida in mid-May, according to some reports. Although political protests have diminished, economic and social unrest is widespread. Steps have been taken to release the state and the economy from the grip of the former ruling party, the Rassemblement constitutionnel démocratique (RCD). The dissolution of the RCD prevents it from putting forward candidates in future elections, but does not bar its members from standing as independents or as representatives of another political party. Indeed, many of these former members have formed their own parties. Many members of Mr Ben Ali's extended family are under arrest, and their assets have been sequestered. Former RCD members no longer form part of the government and are being removed steadily from the highest echelons of the civil service, state organisations and state-owned industries. However, most of those who occupy middle and lower levels of management remain in their posts, although they often face insubordination and recrimination from their non-RCD colleagues. The removal of senior RCD members from national and regional government and state enterprises and disputes over who should replace them are likely to disrupt decision-making and reduce government efficiency.

Much progress has also been made in opening up the democratic process, with more than 70 parties, including Hizb al-Nahda, an Islamist party, now participating in the elections. However, three other Islamist parties have been banned. How to accommodate the popular appeal of Islamism is a problem that has beset regimes across North Africa for some time. In Tunisia, the uprising was a result of economic conditions, with religion playing a negligible role in the protests. Islamist parties were also ruthlessly suppressed during Mr Ben Ali's rule, with party leaders living in exile for most of his time in office. Al-Nahda probably enjoys some support, especially in the impoverished south, but we do not expect it to be the dominant party in parliament.

The army will continue to play a pivotal role in the Tunisian crisis. So far at least, it seems content to hold the ring for the politicians and to act, in the words of the head of the army, General Rachid Ben Ammar, as "the guarantor of the country, the people and the revolution". The army is likely to maintain this stance unless the security situation deteriorates markedly or the efforts to build a new political consensus collapse, in which case a coup is possible.

The election for the National Constituent Assembly has been pushed back from July 24th to October 16th, stoking fears that the interim government is stalling on its promise to introduce democracy. The Assembly, which will have 218 seats, will be responsible for rewriting the constitution, which will pave the way for parliamentary and presidential elections, which are most likely to take place in the first half of 2012. The interim government has agreed to a system of proportional representation through party lists, which will favour the smaller parties, of which there are now many. Currently, more than 70 political parties are in discussions over how to proceed with organising elections. Candidates for the presidency are likely to include leaders of the main opposition parties, exiled leaders from parties that were banned by Mr Ben Ali and independents, including former members of the RCD. In previous elections, opposition parties were not free to campaign to a degree that would threaten the RCD. (In fact, in large cities such as Tunis, Sfax and Sousse, opposition parties were banned from campaigning.) The current parliament has not been dissolved but is, in reality, powerless since the speaker of parliament (and interim president), Foued Mebazaa, has the power to rule by decree. The constitution will need to be rewritten as it contains tailor-made amendments by Mr Ben Ali that made it virtually impossible for a non-RCD member to stand for president. The outcome of the assembly election will most probably see the establishment of a strongly prescriptive constitution, which outlines rules for government, and a parliament, albeit one which is plagued by internal rifts.

The Islamist Hizb al-Nahda is expected to do well in the election

Speculation is growing that a moderate Islamist party, Hizb al-Nahda, will win the most seats in the forthcoming election for the National Constituent Assembly. Islamist slogans and Islamist parties were notably absent from the uprising that led to the demise of the old regime. Although we do not expect any party to emerge as the clear winner, al-Nahda stands to benefit from the growth of moderate Islamic sentiment. In addition, because more radical Islamist groups have failed to win legal status, Hizb al-Nahda will pick up most of the Islamist vote. How big that is remains unquantifiable. Party activists are hard at work re-building the support base suppressed during the Ben Ali years and engaging in welfare and social activity. For example, Hizb al-Nahda volunteers played a large part in restoring calm and order to the poor quarters of the capital, Tunis, that witnessed violent anti-government demonstrations in early May, protecting shops and homes from looting, calming down angry youths when the police presence vanished, and clearing burnt-out cars, roadblocks and mounds of garbage afterwards-in effect replacing the official authorities. This kind of activity will boost its popularity among poorer echelons of society. Recognising the nervousness of secular parties, Hizb al-Nahda has gone out of its way to emphasise its tolerance, openness and moderation, and commitment to democracy and women's rights and to reject claims that it wants to introduce sharia (Islamic law).

Parties established by ex-members of the former ruling party, the Rassemblement constitutionnel démocratique. (RCD) could also do well. Although the party has been disbanded, its assets seized, and senior party members are banned from standing in the election, most of the party's 2m former members are free to set up new parties and take part. The RCD's residual support base could fragment among several parties; however, if some of these parties came together to form alliances the resultant coalitions could do well. While most former RCD members joined the ruling party for personal advancement rather than political conviction, many of them would probably support such alliances to protect their own positions.

In the face of the potential challenge from Hizb al-Nahda and the residual RCD, some small parties are seeking to form coalitions. For example, nine left-of-centre parties, including Harakat Ettajdid (the former communist party), have established a coalition to challenge what they termed "Islamist forces" and "former [RCD] forces", and have invited other parties to join them. We expect more parties to form electoral blocs in coming months.

Tunisia's main Western allies, the EU, especially France, and the US, were slow to support the uprising against Mr Ben Ali. Relations between Tunisia and France have also been strained owing to France's refusal to accept Tunisian migrants and with Italy owing to the influx of migrants from Tunisia since the start of the protests in December 2010. However, the West has welcomed the transition to democracy and has pledged to assist with funds and expertise. The Economist Intelligence Unit expects a substantial amount of international aid to flow into Tunisia. The G8 group of major economies have pledged US$25bn in aid to Tunisia over the next five years. The World Bank and the IMF have also said they will give US$500m each in budgetary support. In addition, the EU has said that it will finalise negotiations on Tunisia's "advanced status" application by July. The US and the EU regarded Mr Ben Ali as an important ally in the "war on terror" and will work closely with the new government to restore stability in the country.

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, while maintaining 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 other cases, where foreign companies have formed joint ventures with companies run by family members of the former president, the government could take over the entire project or simply acquire their stake. The government's strategy of dealing with such situations (of which there are many) will be of particular concern to foreign businesses. With the rise in importance of trade unions, foreign businesses are concerned over whether the new government will implement restrictive labour policies, thereby increasing the cost to businesses.

The interim government has announced plans to draft a supplementary budget to take into account the reduction in the tax take, the increases in public expenditure and the increased costs (estimated at TD2.5bn, or US$1.8bn) of the emergency plan. The rise in spending will put more pressure on the domestic and external financial balances and foreign-exchange reserves, which could be depleted rapidly in the coming months if economic activity does not quickly return to normal levels. Fiscal policy will remain expansionary for the remainder of the forecast period to support development expenditure in the interior regions. In 2011 revenue will be hit by the disruption in business activities. Corporation tax will be the main source of income, as revenue from privatisations will dry up, but even this will be reduced owing to the disruption in business activity. In addition, rising commodity prices this year will only make it harder for the government to implement spending cuts. However, from 2012 onwards the government will attempt to expand the tax base-by reducing exemptions and improving tax collection. We forecast that government revenue will decline in 2011, but from 2012 onwards it will rise rapidly, in line with stronger domestic demand and measures to widen and deepen tax collection. We estimate that the budget deficit reached 4.3% of GDP in 2010 and forecast that it will widen in 2011 to 9.2% of GDP. The deficit is expected to average 4.1% of GDP in 2012-15.

We expect Banque centrale de Tunisie (BCT, the central bank) to implement measures to ensure sufficient liquidity in the banking system, but it will also keep a close eye on inflation, which is forecast to increase on the back of higher commodity prices as well as an increase in government spending. The central bank cut the reserve requirement in May from 4.5% to 2% to encourage lending to businesses. From 2012 onwards, it will maintain a relatively tight monetary policy, with the aim of ensuring that expansion in broad money (M2) stays manageable and inflation remains largely under control. Most major economies, including the eurozone, have already started to tighten monetary policies as part of a policy normalisation process that needs to happen for the private sector to recover. In the short term, the central bank will focus on maintaining liquidity to support bank lending, in light of the continuing unrest in the domestic market as well as in Libya (which will affect inward remittances). The BCT decided to leave its key interest rate unchanged at its most recent meeting.

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We estimate that real GDP grew by 3.4% in 2010, reflecting stronger EU demand for Tunisian products. However, import growth outpaced export growth as Tunisia imported large amounts of cereal to supplement weak agricultural output, owing to a shortage of rainfall. We forecast that real GDP will grow by a mere 0.8% in 2011, slightly lower than the projections of 1-2% made by the Tunisian government. Our revision is based on a substantial decline in industrial output, which fell by 9.4% in the first quarter of 2011, compared with the same period of 2010. We forecast that growth will rebound strongly from 2012 onwards, averaging 3.7% a year in 2012-15, on the assumption that political and social stability is restored.

The new government will maintain high spending growth to stimulate the economy but will be constrained by limited revenue. It will seek to boost investment. Capital spending will increase, especially in the interior, the south and the west of the country, over the forecast period, as the government strives to even out development across the country. Provided that stability is restored, domestic private investment will expand more rapidly, now that Mr Ben Ali is no longer in command. FDI will also remain an important driver of growth in the latter part of the forecast period.

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We estimate that annual average inflation rose in 2010 owing to higher oil and non-oil commodity prices and a fall in agricultural output, which increased the cost of wheat imports. Average inflation fell to 3.1% year on year in the first quarter of 2011. The explanation for this surprisingly low figure is that upward pressure on prices from supply-chain bottlenecks (arising from work stoppages) and from higher global commodity prices has been offset by reduced domestic demand. We forecast that oil prices will average US$108.5/barrel in 2011, revised up slightly from US$101/b previously. We forecast that inflation in 2011 will average 5.3%, reflecting these higher oil and commodity prices. A relatively tight monetary policy will ensure that inflation remains manageable during the forecast period, averaging 4.2%.

The Tunisian dinar has remained resilient in spite of the protests, but if the unrest is sustained, it may put downward pressure on the currency. Full liberalisation of the dinar will occur only after the forecast period. Initially, the dinar will remain pegged to a basket of currencies, of which the euro accounts for around two-thirds. The EU has said that it aims to finalise negotiations on Tunisia's advanced status application by July, which will grant it preferential trade terms. Full currency convertibility will require major reforms to the banking sector. In the interim period, the BCT will take a more flexible approach to exchange-rate management, reducing its interventions in the foreign-exchange market. We expect the dinar to weaken against the euro in 2011 but to strengthen in 2012-13 before weakening again for the remainder of the forecast period, reaching TD1.65:EUR1 by 2015. We expect the dinar to strengthen against the dollar, from TD1.41:US$1 in 2011 to TD1.29:US$1 in 2015.

We have revised down our current-account deficit forecast for 2011 to 10.3% of GDP (from 14.2% of GDP previously) following strong export growth in the first four months of 2011. Exports grew by 11.1% in local-currency terms compared with the same period of 2010. Demand from the EU for Tunisian products appears to be strong in spite of the debt crisis in the eurozone. We expect export earnings to rise by 7% in 2011, a much lower rate than in 2010. From 2013 onwards, Tunisian exports will grow strongly on the back of increased demand from the EU as growth in the euro zone improves. However, we expect political uncertainty in Tunisia to have a negative impact on economic output and tourism revenue, despite robust export growth. The current account will remain in deficit in 2012, but will record small surpluses in 2014-15. Strong domestic demand and economic development will result in an increase in import costs. The rise in imports will follow on from a shift in the export structure from low-value-added sectors to high-tech sectors, which will rely on raw or semi-processed imports. The risk to these forecasts stems from an escalation in unrest in Tunisia.

The income deficit will widen in 2011 as Tunisia's cost of borrowing has increased since the unrest began. The income deficit is forecast to remain broadly stable thereafter, at an average of around US$2.3bn. Companies will increase the repatriation of profits from 2012 onwards. The trade and income deficits will be partly offset by a surplus in services. However, we forecast a decline in the services surplus in 2011, owing to a fall in tourism receipts and higher services imports. We forecast that the services surplus will widen considerably from 2012 onwards as income from tourism, transport and outsourcing services grows. Remittances into the country will decline quite substantially in 2011 owing to the civil war in Libya and will not recover fully until 2013. Part of the shortfall will be financed by an increase in concessional funds from the World Bank and other international agencies. FDI is also forecast to grow strongly from 2012 onwards and will go some way in financing the current-account deficit.

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The crucial election for the National Constituent Assembly, which will write a new constitution and prepare for parliamentary and presidential elections, has been postponed from July 24th to October 16th. The move has the reluctant support of most political parties. According to opinion polls, roughly half of the Tunisian public accepts the delay but many deeply oppose it and fear that the interim government is stalling on its promise to introduce democracy. At the very least, the delay will prolong the state of uncertainty pervading the country and at worst could spark renewed unrest.

The 16-person independent electoral commission, the High Independent Panel, established on May 10th by the Commission for the Achievement of the Objectives of the Revolution and the Democratic Transition (CAORDT), wants to postpone the election to October 16th on the grounds that it is impossible to make the necessary arrangements before then. Kamel Jendoubi, the chair of the commission told a meeting of political parties on May 26th that voting cards had to be distributed to some 400,000 new voters (out of a total of some 7m), 24,000 people needed to be trained to run the election, and 1,500 registration centres and 8,000 polling stations had to be established.

The interim government said it preferred to retain the July 24th date but would take the electoral commission's advice. A postponement was also accepted, if reluctantly, by most political parties from across the political spectrum, although the Islamist Hizb al-Nahda and the Parti démocratique progressiste called for the political parties to have a say in setting the new date. However, the delay to the election has divided public opinion. An online poll commissioned by a local think-tank, politik.tn, on May 25th showed 48% of respondents in favour of the postponement and 47% against, with 5% undecided. The results mirror those of a recent survey by a local consultancy, GMS, in which half of the respondents were supportive of the interim government and half opposed to it. This split in public opinion reflects the strong and persistent doubts over the integrity and intentions of the interim government.

Postponing the election will prolong the period of uncertainty and instability that has gripped Tunisia since the ouster of the former president. It might also provoke further anti-government demonstrations and violence. However, the delay would be justified if it resulted in an election that was well organised and whose result was beyond reproach, rather than one that lacked legitimacy and led to continued instability, with knock-on effects regionally. The delay will allow the political parties-of which there are over 70, most of them unknown to most Tunisians-to develop their manifestoes, organise their campaigns and make themselves known; after 24 years of repression under the previous president, Zine el-Abidine Ben Ali, free and open political campaigning remains a novelty for politicians and public alike.

The CAORDT has proposed that the national constituent assembly will have 218 seats, 199 for Tunisians at home and 19 for Tunisians living abroad. They will be elected in 33 constituencies, 27 in Tunisia and six abroad. The government has already agreed that the assembly would be elected through a system of proportional representation through party lists, rather than first past the post with individual candidates, and also that there would be equal numbers of female and male candidates.

It has also agreed that anyone who, during the last ten years, served in the government of Mr Ben Ali or held senior positions in the former ruling party, together with Mr Ben Ali's former advisers and all those who signed petitions in 2010 calling for Mr Ben Ali to stand for a sixth term of office in 2014, will not be allowed to stand as candidates (although we expect that the interim president, Foued Mebazaa, who is drawing up the list, will try to limit the number of people affected).

Tunisia is still far from a state of normality. An atmosphere of insecurity continues, as does social and economic unrest, with many strikes and sit-ins. Low-level protests and demonstrations continue, and the government's critics are ready to take to the streets to ensure that the authorities maintain the momentum of political reform, as demonstrated by the violent clashes in the capital, Tunis, between police and anti-government demonstrators that erupted in early May. Much of the political uncertainty derives from continuing concerns about the legitimacy and intentions of the interim government, the third since the fall of Mr Ben Ali. The government is an unelected body appointed by the interim president, Mr Mebazaa, and the interim prime minister, Béji Caid Essebsi, both of whom once served under Mr Ben Ali (although both also held high office under the former president, Habib Bourguiba). Mr Mebazaa, 77, was a member of the RCD central committee between 1988 and 2011, and president of the Chamber of Deputies (the lower house of parliament) from 1997 until Mr Ben Ali's fall. Mr Essebsi, 84, was never a member of the RCD, but he was briefly president of the Chamber of Deputies under Mr Ben Ali. The chief of the armed forces, General Rachid Ben Ammar, who has promised to defend the revolution, is a Ben Ali appointee. Other individuals, including businessmen, close to Mr Ben Ali also retain influence through long-standing ties with Mr Mebazaa and Mr Essebsi. None of these men were at the forefront of the popular uprising against Mr Ben Ali.

This has raised fears that the core of the RCD establishment remains in power behind the scenes, and is determined to re-constitute itself and derail the democratic transition, possibly through a military coup. Some of the actions of the interim government have helped to reinforce that perception. The sacking of Farhat Rahji as interior minister seemed designed to halt his purge of the Ministry of Interior and the feared security services. The suspension of the official commission set up in February to investigate corruption and embezzlement as well as the brutality of the police against demonstrators and journalists during the protests at the start of May also raises doubts. The Economist Intelligence Unit believes, on balance, that the intentions of the interim government are not dishonourable; international and domestic pressure should be enough to prevent a return to the old ways, although this will not be confirmed for many months yet.

There are signs that the North African branch of al-Qaida, al-Qaida in the Islamic Maghreb (AQIM), is seeking to exploit the weakening of security in Tunisia in the aftermath of the revolution. The group has threatened several times in the past to attack Tunisia because of its pro-Western policies. In mid-May the authorities announced that security forces had fought a gun battle at a checkpoint in northern Tunisia with members of AQIM. The reports are inconsistent, but it appears that there were up to nine heavily armed men in the al-Qaida group, of whom two or three were killed along with two Tunisian soldiers. The authorities claimed that the group was planning to attack Tunisian tourist resorts. Two other suspected al-Qaida members carrying explosive belts and bombs have been arrested close to the Libyan border.

Tunisia is on track to secure the TD4.2bn (US$3.1bn) of additional external financing it says it needs in 2011 to help fund its 17-point emergency action plan to restore socioeconomic stability and to meet a sharp rise in the budget and balance-of-payments deficits following the popular uprising in January. The planning and international co-operation minister, Abdelhamid Triki, said that TD2.85bn of loans had been promised by the start of June. The African Development Bank (AfDB) had provided US$1bn, of which half is for immediate disbursement, while the World Bank has provided US$500m. The Arab Fund for Economic and Social Development (AFESD) has provided some TD75m (US$53m) for micro-credits, TD150m for regional development projects and TD15m for firms damaged by the unrest. The Islamic Development Bank has provided TD50m to the Banque tunisienne de solidarité, which specialises in micro-credits. France has promised loans worth EUR350m (US$480m), of which EUR185m was for rapid disbursement to support emergency measures. Italy has provided loans worth EUR135m and Algeria US$100m, and the EU has provided a grant of EUR90m. Mr Triki said that loans worth a further TD1.5bn were under discussion with Tunisia's aid partners including the European Investment Bank (EIB), which has already announced EUR600m of new funding for Tunisia. The World Bank has said that it would provide a further US$1bn in 2012. The loans are being provided at low interest rates and are repayable over a period of 17-20 years.

The promises of financial support come at a crucial time. Although the finance minister, Jelloul Ayed, has insisted that Tunisia is able to honour its external debt obligations this year and that rescheduling was "out of the question", paying public-sector salaries might have proved harder. Jamel Belhaj, a senior finance ministry official, said on May 12th that the government had some TD549m to cover public-sector salaries until July, but the government might not be able to do so after that date if the economy deteriorated further.

Leaders of the G8 group of major economies meeting in France on May 26th pledged US$40bn in external loans over the next five years to Tunisia and Egypt, of which Tunisia expects to receive the biggest share-some US$25bn. The French president, Nicolas Sarkozy, said that 50% of the funds would come from multilateral banks, such as the EIB, the AfDB and the AFESD, 25% come from bilateral loans, including EUR1bn from France and 25% from OPEC members, Saudi Arabia, Qatar and Kuwait. The interim prime minister, Mr Essebsi, said the loans were needed to support a new programme of economic development designed to boost growth and cut unemployment and poverty. The programme will address four priority areas: good governance and transparency; employment and regional development; social improvements, such as education, training and welfare; and the modernisation of the financial sector. Public consultation on the plan will begin shortly.

The scale of the social problems facing Tunisia was indicated by the social affairs minister, Mohammed Naceur, who said that some 24.7% of the population lived below the international poverty threshold of US$2 per day. This is over six times the poverty rate of 3.8% claimed by the former regime. Mr Naceur also said that 700,000 people were now unemployed, of whom 69% (483,000) were under 30 and 170,000 were university graduates. If his figures are accurate this would mean that some 180,000 jobs have been lost this year and imply an unemployment rate of over 18% of the workforce (some 3.8m), which is significantly higher than the official unemployment rate of 13% reported by the former regime. Moreover, the employment and training minister, Said Ayedi, has repeated his forecast that unemployment would rise during 2011 as the economy struggled to grow, despite government promises to recruit 20,000 more state workers. The economy needs to grow by 6-7% a year to generate enough jobs to reduce unemployment, but economic growth is forecast to be much slower this year and in the following years. Mr Ayedi also said that the government aimed to reduce unemployment to 7% by 2016, although that target looks optimistic.

Mr Naceur's figures for poverty cast doubt on the reliability of official data produced by the Institut national de la statistique under the former regime, which is widely suspected of having manipulated, or even falsified, socioeconomic data.

Despite the fall in industrial production in recent months, export earnings grew by 11.1% in local-currency terms to TD8.1bn (US$5.9bn) in the first four months of 2011, compared with the same period of 2010. Exports of mechanical and electrical goods grew by 25.4% to TD3.1bn, exports of textiles by 10.4% to almost TD2.2bn, food exports by 18% to TD739m and energy exports by 4.6% to TD1.1bn. Imports in the first four months rose by 5.1% in value to TD10.5bn, compared with the same period of 2010 amid weak consumer demand and poor business confidence. Imports of mechanical and electrical goods fell by 3% to TD4.4bn as businesses held back from capital investment. However, energy imports increased in value by 22% to TD1.5bn, as a result of rising global oil prices, while food imports rose by 35% to TD1.3bn following the poor harvest in 2010 and higher world food prices.

Although the merchandise trade deficit in the first four months narrowed by 11% to TD2.4bn, other external income streams continued to deteriorate. Tourism receipts fell by 49% to TD486m in the year to May 20th while remittances in the same period fell by 9% to TD691m. Weakening external income and growing external expenditure, including the increased cost of debt servicing, have widened the current-account deficit, which reached TD1.5bn at the end of May. Part of the current-account deficit will be financed by foreign direct investment (FDI) inflows, but FDI fell in the first four months of 2011 by 25% to TD424m compared with the same period of 2010. A large part of the deficit will also be financed by foreign aid and concessional loans.

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Please see graphic below

Please see graphic below

Please see graphic below

Land area

162,155 sq km

Population

10.4m (July 2009, Institut national de la statistique); 10.33m (mid-2007 IMF estimate)

Main towns

Population in '000s, excluding suburbs (2004 census)

Tunis (capital): 728

Sfax: 271

Sousse: 173

Kairouan: 118

Gabès: 116

Bizerte: 114

Climate

Mediterranean on the northern and north-eastern coasts, semi-arid inland and in the south

Weather in Tunis

Hottest month, August, 21-33°C (average daily minimum and maximum); coldest month, January, 6-14°C; driest month, July, 3 mm average rainfall; wettest month, January, 563 mm average rainfall

Languages

Arabic and French

Measures

Metric system. The quintal (100 kg) is used to measure crop weights

Currency

The Tunisian dinar (TD) is made up of 1,000 millimes

Time

1 hour ahead of GMT

Public holidays

New Year's Day (January 1st 2011); Mouled, or Prophet's Birthday (February 15th); Independence Day (March 20th); Youth Day (March 21st); Martyrs' Day (April 9th); Labour Day (May 1st); Republic Day (July 25th); Women's Day (August 13th); Eid al-Fitr, or end of Ramadan (August 30th); New Era Day (November 7th); Eid al-Adha, or Feast of the Sacrifice (November 6th); Hijara, or Islamic New Year (November 26th)

Note. The information on this page has been modified and is subject to further change as the political environment remains uncertain

Official name

Republic of Tunisia

Legal system

Based on the constitution of 1959

Legislature

The 214 members of the Chamber of Deputies are elected by universal suffrage for a five-year term; 53 of them are elected by proportional representation from those parties that fail to win seats under the first-past-the-post system; only officially recognised parties can contest elections; a 2002 constitutional amendment led to the establishment of an upper house in August 2005, the 126-member Chamber of Counsellors

National elections

Next election due in 2011 (presidential and parliamentary); amendments made to the constitution by the former president, Zine el-Abidine Ben Ali, will need to be removed to allow for fair representation of non-Rassemblement constitutionnel démocratique (RCD) members

Head of state

Mr Ben Ali stepped down on January 14th 2011, amid widespread protests. A presidential election is due to be held in 2011. Information on the length of the term and the maximum number of terms in office has yet to be released

Executive

Council of Ministers, presided over by the head of state, who is also head of the executive; if the Council does not receive the support of the Chamber of Deputies, the latter may be dissolved by the president, after which elections for a new assembly would be held. The most recent cabinet reshuffle took place in January 2010

Main political parties

Mouvement des démocrates socialistes (MDS); Parti de l'unité populaire (PUP); Parti démocratique progressiste (PDP), formerly the Rassemblement socialiste progressiste (RSP); Harakat Ettajdid (HE); Parti social libéral; Union démocratique unioniste (UDU); Forum démocratique pour le travail et les libertés (FDTL); Hizb al-Nahda

The government

Prime minister: Béji Caid Essebsi

Key ministers

Administrative development: Vacant

Agriculture & environment: Mokhtar Jelil

Culture: Ezzedine Bach Chaouech

Education: Tayeb Baccouch

Finance: Jelloul Ayed

Foreign affairs: Vacant

Health: Habiba Zehi

Higher education & scientific research: Rifaat Chaabouni

Industry & technology: Abdellaziz Rassaa

Interior: Habib Essid

Justice: Lazhar Karoui Chebbi

National defence: Abdelkarim Zebidi

Planning & international cooperation: Abdelhamid Triki

Religious affairs: Laroussi Mizouri

Regional & local development: Abderrazak Zouari

Social affairs: Mohammed Naceur

Trade & tourism: Mehdi Houas

Transport & public works: Yassin Ibrahim

Women: Lilia Abidi

Central bank governor

Mustapha Kamel Nabli