12 March 2014

Tunisia Turns to Citizens in Budget Crunch

Tunis — In his first televised appearance since taking office, Mehdi Jomaa last week said that the government was facing a grim financial situation that required sacrifices.

"Frankly, the situation is more difficult than we thought," AFP quoted Jomaa as saying in the March 3rd television interview aired on Nessma TV and Wataniya 1. "We will have to make sacrifices... You can ignore reality, but reality won't ignore us," he added.

The interim premier presented a set of figures proving the deteriorating economic situation. He noted that investment stalled in the last three years, complicating the situation.

"Now instead of investing we are consuming. The deficit now is in the range of 50 per cent and subsidies increased between 2010 and 2013 by 270 per cent," Jomaa said.

As for solutions, Jomaa said that the government would turn to internal underwriting, organise a national dialogue on the economy, and take urgent actions by accelerating the pace of stalled projects and encouraging job creation through small loans and private investments. Jomaa also said there would be no public service hiring in the current year.

The interim prime minister stressed that his government would be among the first participants in the public underwriting scheme.

"In the event we collect 500 million dinars, that will be sufficient for the government to cover its financial needs and pay to move the economy," Finance Minister Hakim Ben Hammouda confirmed in an interview with Radio Mosaique broadcast on March 6th.

The proposal to rely on domestic borrowing directly from citizens is the third in the history of Tunisia. The first took place in 1964 for the building of the modern state right after colonisation while the second was in 1986 when the country experienced a severe financial crisis.

Some Tunisians have expressed their willingness to contribute to help the state avoid fiscal deficit and achieve economic balance.

"It is a national duty in order for the state to overcome this difficult situation," remarked Walid Smati, a 33-year-old private sector employee. "The contribution to the financing of the state budget must be domestic, which is better than borrowing from abroad. In the end everyone will benefit."

However Dhouha Meyser, a 26-year-old law graduate, expressed the opposite view saying, "Before asking us to sacrifice some of our money, the government should start by reducing its budget and the budget of the presidency, reduce large salaries, and start prosecuting businesses that evade taxes."

"The state budget is no longer capable of shouldering subsidies," explained economist Moez Ejjoudi. "Besides, the International Monetary Fund imposed on us a review of our subsidies' fund."

Ejjoudi added, "The government should also provide an example of austerity like Greece, where wages dropped by 30 per cent."

"That means in the end the biggest losers of the battle of the politicians are young graduates," commented Murad Belkaria, a senior accounting student. "There is no work in the civil service and the labour market is closed, so what should we do?"

Asma Belhaj, a 40-year-old bank employee, called on youths to assume their responsibilities and not to rely only on the public sector but instead take the lead.

"This is an honest speech of the prime minister and better than to say everything is good like previous governments. At least when people are aware of the challenges in front of them and understand the reality of things, they can assume their responsibilities," she added.

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