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Achraf Ayadi spoils the mood following 2.8% growth: we are not out of the woods!

The dinar’s continued drift against the dollar and the euro requires prioritizing the national interest over lobbies, breaking with the over-consumption of imported products, through legal and illegal channels, said Achraf Ayadi, banking and financial expert in Paris.

In an interview with TAP, Ayadi also deals with issues of foreign exchange reserves, public debt, the Finance Act…

What is your reading of the continuous depreciation of the dinar against the dollar and the euro? Is it possible to stop this depreciation?

First of all, all specialists will tell you that imported inflation has a predominant weight in the dinar depreciation. The little control we have shown so far, of our imports and our trade balance, has a direct impact on the decline in the value of our currency.

Also, we must at some point be able to break the vicious circle of overconsumption of imported products, through legal and illegal channels, and the destruction of national jobs.

We must make patriotic choices in favor of the national interest as a whole, and not for the benefit of a few lobbies. This is a prerogative of politics and has nothing to do with economic choices.

Tunisia’s foreign exchange reserves continue their downward trend, alarming in the opinion of some analysts. How do you analyze this trend?

The best remedy against this trend is well known: exporting, attracting foreign direct investors and making tourism more profitable.

All these activities fuel foreign exchange reserves. However, the export sectors need to be much more supported, repositioned on the right segments of the value chain, especially in the industrial sector. We are losing export market shares in the ICT sector as engineers and experienced skills leave the country for Europe.

Then, to attract foreign direct investment in foreign currency, it is first necessary that there is a recovery of local investment, currently weighed down by interest rates difficult to support for businesses, in a sluggish environment.

Finally, with regard to tourism, it is surprising to see its small contribution to the bailout of the coffers. Our positioning on the seaside, the “all-inclusive” and the “low-average ranges” is not very profitable.

The gap between the debt situation of some hotel companies in difficulty contrasts both with a good season in 2018 and the good financial health of some hoteliers in their personal capacity. Have the tax services really done their job?

The fact is that the increase of our foreign exchange commitments abroad is only aggravating the situation. We must feed the coffers and reduce the foreign debt service to have reserves at a sufficient level. It is a question of national sovereignty.

What comment inspires you with the current level of public debt? Is this debt still sustainable?

The real question is not whether the level of debt is sustainable in absolute terms or not. I prefer to focus on the level of growth. Is our current level of growth consistent with our current indebtedness? Is the value created by our economy capable of covering our commitments? Are the state and public services accelerators of the rest of the economy? The answer is obviously not for all these questions. We are indebted in foreign currency to pay old debts in foreign currency. How far and how long will our foreign donors continue to follow us? Our mistakes have somewhat put us at their mercy. This is, again, a question of national sovereignty.

Does the 2.8% growth recorded in Q2 2018 not reflect some recovery?

The economic situation is critical. How many jobs has the growth rate achieved at its current level? How high is this rate of growth to honor our international commitments to donors? Does not it come from exceptional events whose durability cannot be guaranteed (agricultural season, tourism, etc.)?

We will talk about recovery when economic progress is sustained over time, linked to solid reforms and recurring achievements.

What do you think are the avenues (reforms, measures …) to be launched to trigger a real recovery of the economy?

Some of the 68 measures in the Carthage 2 document are interesting. They are not revolutionary; they do not constitute an economic policy as such, but constitute a short-term action plan (6-9 months). Let’s put them into effect, for lack of anything better.

For the long term, it will be necessary to launch real reforms of rupture before being forced to make them. All the changes that we can undertake ourselves, with a reforming and positive spirit, in the public administration and in the economy in general, to unleash the energies and improve the efficiency of the actors, should not be imposed on us from abroad. It would be a historical mistake.

What parameters must be taken into account in the context of the 2019 Finance Act?

Even more interesting than the 2019 Finance Act is the complementary one of 2018! I would like to know how the government will manage to close – in accounting terms – resources and spending this year. The political moment is delicate: who are the lobbies that will have to be spared? Who are we going to sacrifice? How to get the bitter pill of the decline in compensation swallowed? What is the extent of this decline? What decashing measures will be imposed to reduce the weight of the informal economy and restore liquidity in bank

accounts? What tax measures to reduce fraud and increase the contribution without stopping the national investment? How to attract foreign investment without digging the gap between the onshore and offshore?

A finance law is not just a budget puzzle. It is also the transposition over a year of a more global strategy. I am not sure that our current leaders have a real vision of the national economy beyond the 2019 elections.


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