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Wednesday 16 June 2021
HomeFeatured NewsHoucine Dimassi: "Our economy still stalling at a low level"

Houcine Dimassi: “Our economy still stalling at a low level”

Houcine Dimassi, economic expert and former finance minister granted African Manager an interview in which he spoke of several issues, including the current economic situation, the 2017 draft finance law and the government’s proposal to postpone wage increases until the year 2019.

What do you think of the current economic situation?

Overall, the economy is stalling again, treading water and is at a poor and worrying level. Its growth rate freezes in appearance at 1.5%. In fact, the growth rate of 11 branches actually creating wealth and stimulating the economy is zero or even negative. Other economic indicators are no better. During the last 9 months of 2016, our exports have suffered a decline in real terms of 0.8%. This resulted in an alarming deficit in our trade balance of 9.2 billion dinars, or about 12 billion dinars for the year. As for investments, they have not fared much better, especially on foreign investment: -21.2% in the last 8 months of this year.

The wage bill has reached 75% of government spending. What is your comment?

Over the past six years, from 2011 to 2016, the wage bill of the public service has experienced an unprecedented swelling resulting from demagogic populist policies of governments in the post-revolution. Indeed this bill climbed from 6.5 billion dinars in 2010 to over 13 billion in 2016. This trend has generated serious turbulence both in public finance and in terms of overall economy. The amplification of the wage bill in the public has been often made at the expense of capital spending, causing a blatant delay of our basic infrastructure and disrepair of our community facilities. Furthermore, injection of too much money in a faltering economy has sharpened unduly two economic evils: inflation and the collapse of the dinar.

What do you think of the government’s decision to postpone salary increases until 2019?

The postponement of the increase in public service salaries until 2018 or 2019 is certainly a valuable relief to the public finances. Without this decision, the deficit of the state budget in 2017 relative to GDP would have reached about 8%, a rate considered suicidal. However, this decision does not end, at least for a few years, this demagogic policy of increasing wages.

Similarly, this decision illustrates perfectly the selfish and cowardly character of the various governments of the revolution: everyone tries to throw the ball in the camp of the one that follows.

What is your own reading of the 2017 draft finance law?

The salient feature of the 2017 budget lies in the increase of the tax burden. The government, which is experiencing great difficulty in mobilizing external resources in the form of loans, the government resorted to taxes and the like to close this loophole.

However, instead of charging this new burden on two major tax cheaters (liberal professions of choice and speculators-traffickers), the government has made two decent social groups bear the brunt of this pressure. The first are the traditional legal firms, still providing little production, export, investment and job creation.

The second covers all citizens who benefit from a more or less moderate income. In doing so, the government has aggravated the country’s economic recession and its social and political tensions.

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