Tunisia has been ranked 123rd among the 180 countries listed in the Heritage Foundation Index of Economic Freedom 2017.
With a score of 55.7 points out of 100 in 2017, Tunisia maintains its status of country “moderately not free” in the index.
It came ninth in the Arab world behind UAE (76.9 points), Qatar (73.1), Bahrain (68.5), Jordan (66.7), Kuwait (65.1), Saudi Arabia (64.4), Oman (62.1) and Morocco (61.5).
Based on a set of ten indicators grouped into four categories, Tunisia’s index of economic freedom is based on the rule of law, the government size, the regulatory efficiency and open markets.
According to the report of the Heritage Foundation, economic dynamism remains constrained in Tunisia by institutional weaknesses that remain unaddressed, primarily because political instability has hindered decisive government action.
“The regulatory regime, despite some improvements, remains burdensome and deters dynamic entrepreneurial activity. The closed trade regime and rigid labor markets largely prevent the emergence of a vibrant private sector.”
The Reforms adopted in past years, the report says, have failed to deliver tangible benefits to the stagnant economic system or trigger more rapid growth. “Deeper reforms to enhance governance and strengthen the critical pillars of economic freedom are needed to push the economy along a positive path of transition.”
Although the judiciary is generally independent, protection of property rights remains uneven, hindered by corruption and lengthy case backlogs, says the Heritage Foundation, pointing out that government weakness encourages graft at lower levels of bureaucracy and law enforcement.
“Long-standing public resentment of efforts against smuggling along the Libyan border, which eliminated local jobs, intensified in 2016 after the construction of a border wall to block infiltration by terrorists.”
The report recalls that government spending has amounted to 29.8 percent of total output (GDP) over the past three years, and budget deficits have averaged 5.0 percent of GDP. Public debt is equivalent to 54.5 percent of GDP.
Despite some progress, the regulatory framework still lacks transparency and efficiency, says the Foundation’s report. It added that completion of licensing requirements remains burdensome. The rigid labor market has been stagnant, failing to generate dynamic job growth.
“In 2016, social tensions triggered populist spending policies to placate a frustrated electorate, but low oil prices should permit the government to achieve its goal of phasing out fuel subsidies.”
According to the American foundation, Trade is extremely important to Tunisia’s economy; the value of exports and imports taken together equals 102 percent of GDP. The average applied tariff rate is 13.1 percent. “Foreign investors may not own agricultural land, and investment in other sectors may be subject to government screening. State-owned enterprises distort the economy.
The weak financial sector is fragmented. Access to credit is limited, and capital markets are underdeveloped.”