27 August 2013

Tunisia: Political Crisis Weakens Tunisian Economy

Tunis — Tunisia's political and security crisis is now casting a shadow on the country's fragile economy.

Central Bank of Tunisia Governor Chedly Ayari on Friday (August 23rd) admitted that the Tunisian economy was facing real difficulties due to the many complex challenges impeding development.

"It won't be correct or accurate to claim that Tunisia's economy has improved," he said. "We in the Central Bank admit that the country's economic condition is difficult and is stumbling in more than one aspect."

The latest official figures indicated that foreign investments dropped by 1.3 per cent in the first half of this year to 939 million dinars, compared to 951 million dinars during the same period last year.

The dinar also dropped to its lowest levels against the euro and US dollar last July. The trade deficit has also continued to worsen, reaching 5.553 billion dinars in the first six months of this year, compared to 5.468 billion dinars during the same period last year.

Economic and political observers in Tunisia believe the situation could reach a catastrophic stage if the necessary measures are not taken to fix it.

Wided Bouchmaoui, head of the Tunisian Union of Industry, Trade and Handicrafts (UTICA), said last Wednesday that the Tunisian economy was facing a serious situation. She stressed the need to find a solution to the political crisis as soon as possible and to pay more attention to the economy.

In his turn, economics professor Abdeljalil Badri confirmed that the country was seeing a drop in economic indicators, aggravated by the political crisis and security unrest.

He added that politicians have to put the interests of country above all other considerations and support the economy by establishing urgent mechanisms and measures to get out of this situation with as little damage as possible.

Government officials, however, dismissed such concerns and said they expect the country to be able to get past the financial crunch.

Ayari described the economic crisis as temporary and said the country was far from bankruptcy.

He noted that the cries of distress made by some were understandable given the drop in the most prominent economic indicators. However, he said that such warnings included unjustified exaggerations.

"We can't say we've reached the edge of disaster," he added. "This is because difficulties facing the economy, though big in number, are still temporary. They were the result of drop of production and of attraction of foreign and domestic investments, drop in financing development projects, rise in inflation rate and increase in trade deficit, etc."

Ayari dismissed allegations that Tunisia would not be able to meet its internal and external financial obligations. He also denied that the public treasury was suffering from a shortage of foreign currencies, noting that figures showed the country's foreign currency reserves cover imports for 109 days.

Tunisia's economic concerns are a product of worsening political and security conditions, he said.

"Reaching consensus among all parties to resolve outstanding political issues and putting an end to security chaos will restore trust to local and foreign investors to invest anew in the country," he told Magharebia.

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