“Tunisia needs to review its compensation policy and to establish a subsidy program targeting primarily disadvantaged groups, “argued Mrs. Gita Subrahmanyam, a consultant at the African Development Bank (AfDB) and Professor in London School of Economics.
In an interview with TAP, the expert believes that the current subsidy policy adopted by Tunisia more benefits the rich more than the poor and its cost weighs more on the state budget, in particular because of the increase in the price of oil on the international market.
According to the latest statistics from the Ministry of Finance, compensation expenditures stand currently at 4 billion dinars against 1.5 billion dinars before the revolution.
This type of program has been successful, in several countries, she said, citing the example of Argentina, which experienced the same circumstances as Tunisia or worse (flight of president in 2001, depreciation local currency, sluggish economy…).
Through this program, launched in 2003, Argentina was able to boost its economy by achieving growth rates of around 9% during the period (2003 – 2007) and reduce the unemployment rate to 10% in 2006, while it was about 25% in 2001.
“If Tunisia opts for a targeted subsidy, it can not only improve the living conditions of the poor but also save money, because of its low cost (the program), i.e.1% of GDP,” said Mrs. Surahmanyam.
According to estimates of the Argentine Ministry of Employment, the contribution of targeted subsidies to GDP is around 2 to 2.5%.