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HomeInterviewTunisia: Stability is main determinant of investment, says economist Mohamed Haddar

Tunisia: Stability is main determinant of investment, says economist Mohamed Haddar

Mohamed Haddar, President of the Association of Tunisian Economists believes risks and challenges have increased since 2010, two years after the revolution. The lives of Tunisians have become more difficult: the trust has been undermined and the economy is down with an expanding informal sector.

In this particular climate, Mohamed Haddar believes the new government cannot, in nine months, deal with all these problems.

Interview:

How do you assess the economic situation of the country?

We should recall that the main factors behind the Revolution in Tunisia are economic: unemployment, particularly that of young graduates and widespread poverty and marginalization, especially in inland areas and neighborhoods of large cities as well as corruption.

Unfortunately, compared to the situation during the former regime, risks and challenges have increased: the living conditions of Tunisians have become more difficult: confidence is undermined, the economy is down with an informal sector up, public utilities are clearly deteriorating, unemployment reached record levels, especially among young people in deprived areas, prices are increasing at a very rapid pace and insecurity and crime are growing. Discouraged, the administration is slowing down. Investments have come to almost a complete standstill. There is really an uncertainty and a fear of tomorrow.

Tunisia faced for weeks a political and social crisis and hence an economic and financial one. All indicators are flashing red. What are the reasons?

The situation you are describing dates back to over one year. But the assassination of Chokri Belaid, which was a turning point in the history of the country, raised a wave of emotion, rage and indignation and the early slogans of the revolution – “Work, freedom and dignity” – were chanted. In fact, many events have marked negatively the opinion both nationally and internationally. The attack on the U.S. Embassy has a high economic, social and political cost. Beyond clashes with police forces, this shock has damaged the international image of Tunisia, already devastated by an onslaught of prejudice. This attack was marked by a passivity of the country’s leaders. In facing violence, the government dithers, while the population already hit by economic difficulties, is worried.

This climate, according to Tunisian businessmen, does not create confidence and visibility necessary for recovery of investment and creation of wealth and jobs. Reference to the perception of Tunisian entrepreneurs is significant of the business environment.

For businesses, insecurity, corruption and government policies are essential factors that damage the investment climate. In such an environment, companies argue that the restoration of political, economic and social stability is currently the main determinant of investment. Due to political, economic and social instability, companies are unable to make predictions.

The government of Ali Laarayedh is obliged to fill in gaps and to address the problems faced by citizens, especially soaring prices and the erosion of the purchasing power. Which measures need to be taken?

With the elections of October 23, Tunisians hoped the establishment of a strong government that draws its force from the legitimacy of the polls, eager to implement the requirements of the Revolution and to meet their aspirations for dignity, well-being and freedom in accordance with its election promises. At the political level, Tunisians expected to see the new constitution completed within a year at the latest, to allow the society to take the path of “modernity.”

At the economic level, Tunisians expected the government to lay the foundations of a model of sustainable and inclusive growth that breaks with social and regional exclusion.

At the institutional level, Tunisians expected the introduction of new rules of the game ensuring good public and private governance, ultimately resulting in the exercise of citizenship. None of these came true.

Indeed, two years after the Revolution, except for the freedom of expression, Tunisians, particularly those from inland regions, say they have not seen tangible economic and social results. The two main drivers of the economy, namely private investment and exports, are relatively down with a growing informal sector and a downgrading of Tunisia by major rating agencies. In nine months, the new government cannot cope with all these problems.

Recently, ASECTU suggested developing a roadmap agreed upon by all stakeholders without exception to “reassure business players and partners, revive private investment and economic growth and create jobs.” What are the main thrusts of this roadmap?

In its statement of February 20, the Bureau of ASECTU noted that economic factors are behind the uprising. It also states that two years after the Revolution, the social and economic situation is difficult. The economic and social conditions of Tunisians have deteriorated.

More worryingly, the two main drivers of the economy, namely private investment and exports, are in sharp decline with an informal economy, outside of any regulation, growing sharply in the shadow of a State that is losing authority and prestige. Citizens are worried today because of the deadlock faced by the country. They misunderstand why the transition process is at a standstill.

The lack of commitment by those in power (including the National Constituent Assembly) to a roadmap and timetable, the lack of security and political stability, the emergence in the Tunisian landscape of political violence have eroded public confidence in state institutions and their leaders and have cast doubt on the outcome of the transition process and the possible outcome at the next election.

This climate of tension, insecurity, violence and impunity, as well as the lack of a roadmap ending all speculation about the transition process and the intentions of those in power, are not likely to reassure the population and the economic players and restore the confidence of national and foreign investors and countries that are our partners.

It calls on politicians to initiate a dialogue to end these tensions and to take a clear and firm commitment to implementing a roadmap that will be developed in a consensual manner involving all stakeholders with no exclusion.

This helps to build confidence, reassure stakeholders and business partners, revive private investment and economic growth and create jobs.

The current period requires a government of proven expertise in the management of public affairs and having a specific mission including, primarily, the restoration of order, security and the rule of law and the management of current affairs by paying special attention to economic and social issues.

It is by giving strong signals to citizens and investors and cultivating the hope of youth, that we can create conditions for restarting our economy and restoring our undermined external financial balances and thus create wealth and employment.

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