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HomeFeatured NewsTunisia: Interim Government launches short-term economic and social program

Tunisia: Interim Government launches short-term economic and social program

The Interim Government adopted a short-term economic and social program which aims to create an immediate impact without, however, mortgaging the future, said Mr. Jalloul Ayed, Minister of Finance.

During a news conference held Friday in Tunis, the Minister said that this program includes a series of horizontal measures (17) and sectoral policies. These measures focus on five priorities, namely ” security “,” employment “,” support for the economy and its financing “,” regional development “and” social actions.

Security

This data, said the minister, is essential for all development activities of individuals and companies.

Employment

The minister announced the launch of an exceptional program of recruitment in the public sector (20,000 jobs) and a stimulus to encourage companies to make an effort similar to the State (20,000).

He recalled that the state will support 200,000 youth through interventions of mechanisms of the active employment policy, including the program “AMEL,” indicating, in this context, that the self-financing of projects to be presented to the Tunisian Solidarity Bank (BTS) by promoters who are unable to ensure this self-financing will be supported, while encouraging them to come together as part of companies. It is provides for doubling the amounts allocated to programs for utilities in the regions.

Support the economy and its financing

The State has implemented a program of support and stimulus to companies going through temporary economic difficulties, in order to preserve activities of these units and jobs. Specifically, this measure provides for support by the State of 50% to 100% of the employer’s contribution to the statutory system of social security for new investments located in regional development zones and 2 points of interest rate under rescheduled debts.

Specialized cells have been created to receive business demands and ensure their study within the departments of Industry and Technology, Tourism and Trade, Agriculture and Environment, said the minister.

The State has also decided to restructure the micro-credit and SME financing mechanism to create banking clusters in regions. The objective of this measure is to strengthen coordination between the BTS and the BFPME (bank for financing small and medium enterprises), the SOTUGAR and SICAR addition to supervising investors and easing funding operations for all types of projects.

Exceptional financial and fiscal measures have been taken to encourage investment in priority regions, said the minister. These include exempting companies from taxes on wages (TFP, FOPROLOS) without limitation in time for industrial projects, crafts and services based in these areas.

There will also be in 2011 a reduction in VAT rate from 12 per cent now to 6 per cent, under imported equipment, in addition to the suspension of VAT for purchases made until December 31, 2011.

The program provides, moreover, for reducing the rate of default interest under the presentation of guaranteed bonds for taxpayers subject to payment of customs duties and taxes that exceed 5 thousand dinars, from 6 pc now to 3 pc to December 31, 2011.

The affected businesses will benefit from the deduction under the decree-laws on extraordinary measures for business support to continue their business, depreciation on machinery, equipment necessary to operate acquired locally or imported during the year 2011 over three years instead of 7 years.

To cope with difficulties in exporting their services and products, totally exporting companies can sell during 2011, a portion of their production or provide some of their services on the local market within 50 pc of their turnover at exports achieved during the year 2010.

The program is also focusing on improving the liquidity of the taxpayers and simplifying their tax obligations.

Companies legally subject to a statutory auditor and recording a tax credit of a corporation will be granted an advance of 50 pc of credit without prior verification, within 30 days from the date of filing a restitution request. The program also plans to exempt taxpayers who file spontaneously, within a period not beyond September 30, 2011, their corrective tax statements or unfiled statements, and non-prescribed due before February 1, 2011 from the payment of liquidated damages due.

The measure also exempts taxpayers who repay their identified debts from the payment of penalties to recover amounts paid during the year 2011.

For beneficiaries of the tax amnesty of the year 2006 that did not comply with the timetable agreed in this framework, the amounts not yet recovered will be rescheduled over a further period not exceeding three years for local communities’ debts.

In the same context, the program aims to remove the advance of 1 cent on all sales of industrial production companies and businesses engaged in wholesale trade in favor of physical persons not subject to income tax under the current system.

On the other hand, the minister announced the start of infrastructure projects needed for investment.

They provide for creating or improving industrial buildings and areas and e-work centers, in addition to irrigation perimeters and local tracks. Pilot projects in the field of ICT will be adopted in the sectors of electronic documentation, digitization of library and audiovisual archive and maintenance and management of

Hospital Trusts.

The state will also launch a program to promote the new image of Tunisia, which provides for the organization of events in Tunisia and abroad, in addition to promotional campaigns aimed mainly at foreign investors and economic partners of Tunisia.

Regional Development

An additional plan for which an amount of 251.3 million dinars has been mobilized to strengthen the development process in governorates will be established, said the Finance Minister, noting that total investments earmarked to the financing of regional development programs have reached 333 million dinars, i.e. more than the double of the investments planned under the 2011 budget.

In this context, the Minister announced the revision, before the end of May, of the State budget and the Finance Act of 2011 with a significant reallocation of spending for priority areas and regions in light of the demands expressed by the regions.

Budgetary allocations will be granted to regional authorities to boost regional employment and social protection mechanisms, while adopting procedures that combine speed, transparency and equity.

Regional councils will be dissolved and replaced by special representations where the civil society and local skills will be represented. Implementation of major projects and pilot projects in the field of ICT in the regions is also planned.

The minister said a number of investors expressed their willingness to mount large-scale projects in regional development zones, adding that the state will make every effort for their realization as soon as possible.

Social Action

The minister noted that the government has launched a program aimed at strengthening aid for needy families. The aim is to cover all families living below the poverty line, or 185,000 families, and provide micro-credit or endowments for the improvement of housing for 20,000 families.

Support will be given once to people returning from Libya (400 dinars and 600 dinars per person per family), plus other facilities for access to finance, said the minister. He added that a legal framework for charitable foundations will be developed.

The minister said the economic and social program will be put under the complementary Finance Act and the State budget, the ultimate goal being to take into account new data resulting from the Revolution of the Tunisian people.

He said that this program is distinguished by the speed of execution in all areas without however, reducing the room for maneuvers the next government to be elected.

The minister also said his department has initiated studies to develop a complementary plan aimed at boosting the economy and reforming funding mechanisms to resolve the issue of unemployment.

It will also create a fund of deposits that will contribute to the development of venture capital, consolidate mechanisms for financing SMEs and facilitate strategic projects in the long term in the area of basic infrastructure and mega projects, in addition to setting up of banking clusters tasked with funding all priority economic sectors.

Responding to questions from journalists, the Finance said that the economy has suffered losses valued at 2.244 billion dinars during the period of the revolution, adding that Tunisia will need additional funding of around 4 billion dinars.

Referring to the external debt, the minister recalled that it is estimated at 16 billion dinars, saying that Tunisia does not request the rescheduling of its debt with the aim of preserving the independence of its decision.

Tunisia will not borrow on the international financial market after the lowering of its sovereign rating by rating agencies, because in this case, interest rates will be very high, “said the minister.

He added that if additional measures are not taken, GDP growth will range between 0 and 1 pc in 2011, against a growth rate of 5.4 pc expected before the revolution.

In addition, the budget deficit will be 5 pc because regression of resources and overall investment will decline by 1.5 billion dinars, 1 billion dinars of which under external investment, in addition to the decrease in the rate of job creation from 80,000 to 15,000.

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