The effect of the international economic crisis on Tunisia is widening and the country is still obliged to revise its forecasts, to readjust them and to manage the economic difficulties before our very eyes, to keep on getting by and secure an economic growth, always positive. That is the purpose of the new additional finance act passed on Thursday. This new law is good news for companies that are threatened by the crisis, despite bad news relating to tax revenue.
Budget deficit up to 3.8%.
The crisis has its good points, as the prices of petroleum products. Good points may, however, also be bad ones. The 2009 budget was worked out on the basis of a 90 USD barrel. Prices getting lower and lower, they ought to be brought from 90 to 60 USD only. This will allow the budget to save 220 MDT on fuel subsidy. But it also generates a loss of 440 MDT for the Treasury coffers in terms of tax on oil companies. Excluding petroleum, domestic taxation should still record an increase in yield of 3.1% compared to the record of 2008.
But the crisis as far as Tunisia state budget is concerned is also the “loss” of 68 million dinars in customs duties and VAT, in connection with the significant drop in foreign trade growth rate. During the first five months of this year, Tunisian exports have actually declined by 21.3% from 7920.1 MDT to only 10057.7 MDT.
Hence, the tax burden, which is a very important ratio for companies and investors, fell to 19.9% against 20.4% originally, budgeted in 2009. Revenue being declining by 747 MDT, and spending to support businesses and growth being necessary, the State should increase its debt and debt service. Tunisia debt service should increase by 50 MDT that will be dedicated to repayment of the outstanding external debt. The increase of this service is the result of the surge in commodity prices and currencies including the euro, which represents some 60% of Tunisian foreign debt. It is not expected that the whole amount of public debt at the end of this year, won’t exceed 50% of GDP.
So, it is also the rate of budget deficit that will be revised upwards, so that the budget remains balanced. For this year 2009, therefore, the budget deficit will stand at 3.8% against the 3% originally planned. The amount of this deficit, excluding grants and privatization, is expected to reach 2022 MDT. This upward revision of budget deficit, a practice also accepted by more than one European country, is also, according to official documents, a sovereign decision of Tunisia whose purpose is to support companies facing hardships and strengthen the country’s economic activity.
It should be noted finally that, if we do not yet know if the Tunisian government will go this year on the financial market to collect the necessary debt, on the contrary we know that the revenue record for 2009 will not be completely negative. The current year is expected to record an increase of 488 TDM in terms of non-tax revenue from public enterprises.