In seven chapters, a recent World Bank report “Reforming energy subsidy for a more sustainable Tunisia” summarizes all the ills of the country’s economic situation. The “Spring 2023 Economic Monitor” mentions “a moderate and still slow economic recovery, a current account deficit that is widening under the impact of rising world prices, external financing that has become increasingly difficult to find, leading to shortages of basic products, inflation that is reaching record levels, forcing the BCT to intervene on the TND, a budget deficit that has become high under the pressure of subsidies, a growing public debt that is becoming difficult to finance, and, finally, growth prospects that remain uncertain.
For Tunisia, which ended 2022 with low growth of 2.4 per cent, down from 4.3 per cent a year earlier, the World Bank forecasts “GDP growth of 2.3 per cent in 2023, with potentially large differences depending on the evolution of financing conditions and the pace of implementation of structural reforms. Relatively more favorable commodity price developments and some public expenditure reforms are expected to reduce the current account deficit, which would remain difficult to finance without reforms.
The government plans to consolidate the budget in 2023, mainly by reducing energy subsidies and the wage bill in real terms and by continuing to focus on revenue increase. The financing of the deficit will remain a real challenge in 2023. The agreement on an Extended Fund Facility (EFF) program with the IMF and the implementation of an ambitious reform program would help cover external financing needs. Continued pressure on global commodity prices and uncertainty about external financing pose significant downside risks to Tunisia’s economic growth.
The economic picture painted by the World Bank’s experts is, if not bleak, at least as dark grey as an ominous cloudy sky with no rain in sight. A table, available and free to download for the Head of State and his Prime Minister, in case they lack a clear and quantified diagnosis. The prospects are all the more worrying because they are taking shape in a context of political uncertainty, economic stagnation and a refusal to reform.
The prospects for Kais Saïed’s Tunisia, as outlined by the World Bank’s experts, do not seem to be flourishing. But perhaps the World Bank, which recently sanctioned President Saïd’s remarks deemed racist by suspending the framework of its cooperation with Tunisia, is also part of the conspiracy against “the will of the people”!
