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Tunisia: cautious optimism of Kamel Nabli

The economic recovery in Tunisia will be slow and patchy because of the lingering effects of its recent social upheaval and the conflict in Libya, the governor of the country’s central bank said Wednesday.

“Clearly the events of recent months have had a significant impact on the economy — mostly negative,” the governor, Mustapha Kamel Nabli, said during an interview in Paris, where he was attending a World Bank conference.

The central bank forecasts a growth rate of 1 percent this year, after an expansion of 3.7 percent last year. The bank might revise that forecast up slightly next month, Mr. Nabli said, given improvements in the security situation, a recent resumption of manufacturing exports and a promising agricultural season.

But the situation in the country, both economically and socially, remains fragile. The security situation is tense, tourist arrivals have fallen, there have been a number of strikes and unemployment is high, at around 14 percent.

Mr. Nabli said the country’s resources were also being stretched to the limit by an influx of refugees from Libya since the international intervention in March.

“The Libyan factor is an enormous one,” he said. “We did not decide this, it’s the G-8 who decided to go to war in Libya, but we are bearing the cost and we have not seen the kind of support that should be forthcoming to help us.”

The cost includes lost trade and investment — the Libyan and Tunisian economies were intertwined through joint ventures and workers who remitted money back and forth — as well as refugees.

“Maybe by now we have 80,000 Libyans and they are not in camps, they are living with Tunisian people,” he said. “They are being housed and fed and schooled and treated in hospitals and this is a huge cost.”

Mr. Nabli is one of several prominent Tunisians who has been enlisted to form a temporary government and prepare for elections. A former government minister and World Bank official, he said he would like to stay on at the central bank after the election. It is unclear when those elections will take place. A committee has proposed a pool in October, while the government has said it would like a vote next month.

Last week, leaders from the Group of Eight major economies, meeting in Deauville, France, pledged $20 billion for Egypt and Tunisia. The World Bank, the African Development Bank and European countries have already offered $1.5 billion. Mr. Nabli said his country would require about $3 billion to $4 billion in external financing this year, and similar amounts in the coming years, to cover its debts and its current account deficit.

Further out, Tunisia will return to the international bond market, although its recent ratings downgrades have made that a potentially costly exercise. In January, during the unrest, Moody’s Investors Service cut its foreign currency debt rating a notch to Baa3, the lowest investment grade. In March, Standard & Poor’s and Fitch Ratings followed suit.

“Given our ratings, we are not very keen to go to the market even though our spreads have come down over the last few weeks,” Mr. Nabli said. “We have the potential to go back, but we will wait, we’d like to see it come down further.”

“Although the transition to democracy could well improve confidence in the long term, political upheaval has worsened the short-term outlook for the economy, public finances and financial system,” Charles Seville, Fitch director, said. Mr. Nabli said a bond issue in 2012 was far more likely than in 2011. “I think we think we can manage this year with the various sources of funding that we have.”

In the meantime, the hunt for assets looted by the former dictator Zine al-Abidine Ben Ali will take some time, the central banker predicted.

Some estimates from inside Tunisia suggest that as much as 30 percent to 40 percent of the Tunisian economy was controlled by Ben Ali’s family and that of his wife, Leila Trabelsi, with assets scattered globally.

“It’s now a judicial process and it’s taking its course,” he said. “There have been requests and there have been freezing of assets in Europe and elsewhere and we are activating the process, we are working with the World Bank and different partners.” “Nobody has really an idea” exactly how much money was looted, he added. “There are many numbers.”

Mr. Nabli said that his priority would be to strengthen the banking system, which comprises more than 20 banks. “There is a consensus that there needs to be some restructuring, but I don’t think you can do that as this time. We’ll focus on it as we go forward.”

There will also be a number of privatizations as assets are recovered and companies restructured. The stock exchange, having closed for several days during the upheavals, is open for business. In May, Telnet, an information technology group, listed on the exchange, the first I.P.O. by a technology company in the country. Still, for the year to date, the Tunis Stock Exchange index is down 19 percent. “The transition is going reasonably well,” Mr. Nabli said. “We’d like people to be confident; it’s going in the right direction. It’s a good investment in democracy.”

Courtesy New York Times

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