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Tunisia- Budget 2016: 1,369 MTD in wage increases and shortfall of 31 MTD

The State Budget for the year 2016 was set at 29,250 billion dinars, up 7.1% (about 1,936 billion dinars), compared to the 2015 budget.

The government expects in the 2016 budget to overcome the economic recession (growth will be around 0.5% in late 2015, according to BCT) by achieving a growth rate of 2.5% at constant prices and 7.9% at current prices over the next year.

These projections were made based on an average price of 55 dollars per barrel of oil and exchange rate of dollar at 1.970 dinar, euro at 2.2 dinars and thousand yen at 16.5 dinars.

Forecasts of the state budget also bank on average grain prices $ 420 / ton of durum wheat, $ 240 / ton of wheat and $ 250 / ton barley.

In terms of trade, budget projections predict a rise in imports of goods by 3.9% and exports by 3%.

Tax reform: a shortfall of 31 MTD

In terms of budget resources, own resources are estimated at 22.656 billion dinars (77.5% of total resources), of which 20.6 billion dinars of tax revenues (+ 11.1%, bringing the rate of the tax burden to 21.9%).

Borrowing resources amount to over 6.5 billion dinars (domestic and foreign markets). New tax measures provide for the mobilization of external resources worth 3,594 MD to consolidate and continue various social and economic reforms, in addition to the resort to domestic borrowing in the amount of 2000 MTD.

According to the document of the 2016 budget, new tax measures planned seek to achieve fiscal equity and modernize the tax administration and customs.

Tax reform will result in a shortfall for the state of 31 million Tunisian dinars (MTD), while the establishment of an automatic adjustment mechanism of oil prices will generate approximately 362 MTD.

The income tax boosted by rising wages should provide additional resources estimated at 320 MD, mobilization of foreign donations should generate 150 MD and the issuance of Islamic Sukuk an amount of 1,000 MTD.

11.8% Increase in expenses dedicated to salaries

Management expenses were set at 18.619 billion dinars, including 2,612 MTD of subsidy (2.8% of GDP), of which 579 MTD in hydrocarbons subsidies, with development costs of around 5,401 MTD and public debt servicing amounting to 5,130 MTD.

Regarding expenditure on wages (70% of management expenditure and 13.8 of GDP), they increased by 11.8% (or 1,369 MTD) between 2015 and 2016, reaching 13,000 MTD.

70 MTD are allocated to the recruitment of 15,915 graduates from training institutions (ministries of interior, defense and justice) and some priority sectors with retirement of 13,724 agents, which will result in an increase in the total number of officers to 2,191 people.

In terms of expenditure on salary increases, 650 MTD are dedicated to further increases planned for 2016, 300 MD allocated to the implementation of previous agreements signed in this area and 112 MTD to exceptional promotions for the benefit of teachers and professors.

According to the budget document, the budget deficit for 2016 should be limited to 3.9% against 4.4% expected for 2015, the current external payments deficit at 8.3% and the public debt ratio at 53.4%, against 52.7% expected for 2015.

The expected evolution of investment is 18.7% of GDP in 2016.

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