According to the latest projections by the African Development Bank (AfDB), Tunisia’s economic growth is expected to remain modest over the medium term, at 1.9% in 2023 and 2.8% in 2024, driven by the manufacturing and services sectors.
Inflation is expected to rise further to 9.2% in 2023 before declining to 6.8% in 2024, assuming a prudent monetary policy and an easing of external inflationary pressures.
AfDB projections suggest a narrowing of the fiscal and current account deficits as a result of the National Reform Program launched in 2022, which aims to strengthen private investment, consolidate public finances and improve the performance of public enterprises.
However, this outlook could deteriorate due to the high risk of debt distress, which limits access to external financing, warns the AfDB.
It adds that the recovery could also be slowed by social tensions caused by rising prices in a difficult economic environment for households, restrictive fiscal policies that penalize public investment, or heightened political uncertainties.
In order to stabilize the macroeconomic framework, the AfDB believes that Tunisia should adopt a medium-term public debt reduction strategy, implement a plan to restructure public enterprises and reduce state-guaranteed external debt.
It should also seal the preliminary agreement with the IMF to restore fiscal sustainability to send a positive signal to private investors and donors.
“Its entry into force would unlock concessional financing from other development partners,” the AfDB report concludes.