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Budget deficit worsens by 80% to 6.6 billion dinars at end October 2020

Tunisia’s budget deficit worsened by 80% at end October 2020 compared to the same period of the previous year to 6.6 billion dinars.

As evidenced by the provisional results of the execution of the state budget at the end of October 2020, this worsening of the budget deficit is the result of the decline in tax revenues and the continued increase in debt-related expenditure.

At the end of October 2020, the State’s own revenues amounted to 24 billion dinars, compared to 26.1 billion at the same date a year ago, a decline of 7.7%.

This decline is mainly due to the drop in tax revenues by 7.7% from 23.5 billion dinars to 21.7 billion.

 As for non-tax revenues, they fell 7% to 2.3 billion dinars.

With regard to tax revenues from direct taxes, income tax increased by 1.3% to 7.3 billion dinars, including 4.8 billion in taxes on wages (+7.6%).

Revenue from corporate taxes fell by 21.7% to 2.4 billion dinars due to the sharp decline in taxes on oil companies (-48%) to 439.2 million dinars.

As for tax revenues from indirect taxes, customs duties fell by 9.9% to 958.6 million dinars, while total revenue from VAT fell by 12% to 5.7 billion dinars.

Beyond the delays in recovery resulting from the health crisis and lockdown, these setbacks are fundamentally explained by the collapse of economic activity, the fall in consumption and foreign trade.

Higher current spending and investment sacrificed

The total expenditure of the State was 26.9 billion dinars at the end of last October, compared to 26.5 billion one year earlier (+1.5%).

Management expenditure fell by 1.3% to 20.4 billion dinars following in particular the sharp decline in expenditure related to interventions and transfers of 39.6%.

On the other hand, salary expenditures increased by 12.8% to reach 15.8 billion dinars representing 77.5% of total government operating expenses.

Similarly, expenditure on debt servicing went up by 11% to 9.7 billion dinars, including 6.6 billion for repayment of principal (+12.3%) and 3.1 billion for interest (+8.6%).

Moreover, the sacrifice of public investment continues. Indeed, out of the 26.9 billion dinars of expenditure at the end of October, the State spent only 1.65 billion dinars on direct investment (-14%), or barely 6% of its total expenditure.

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