19 March 2014

Tunisia Confronts Budget Crisis

Photo: Mehdi Jomaa/Facebook
Tunisian politicians agreed on Industry Minister, Mehdi Jomaa, to be the country's new PM.

Tunis — Tunisian Interim Prime Minister Mehdi Jomaa returned home on Wednesday (March 19th), following a fund-solicitation trip to UAE, Saudi Arabia, Qatar, Kuwait and Bahrain.

Accompanied by other ministers and business leaders, Jomaa made the whirlwind Gulf tour to reassure foreign partners that it was once again safe to invest in Tunisia.

The effort to bring foreign funds to Tunisia includes Europe. Just before his 5-day trip to the Gulf, the interim premier met with European Union Enlargement Commissioner Stefan Fule.

The lifting this month of Tunisia's state of emergency may be a factor in raising cash. The EU will indeed give more money to Tunisia in 2014 than last year, Fule said Friday in Tunis.

According to Central Bank of Tunisia Governor Chedly Ayari, the EU promised a loan of 250 million euros. The World Bank also plans to give Tunisia a $500 million (362 million euro) loan this year.

This increase in foreign financial aid comes amidst security improvements and new political stability, Tunisian Finance Minister Hakim Ben Hammouda noted.

And Tunisia needs the funds now more than ever. The budget deficit in 2014 will be in the range of 7.8 billion dinars (3.56 billion euros).

"For the first time in the history of Tunisia, basic expenditures exceed revenues," economist Moez Ejjoudi told Magharebia.

"The subsidy fund is now 5.5 billion dinars and we have 700,000 employees in the civil service, a service that can operate with just 350,000 employees. All of these factors contributed to the budget deficit," he said.

The interim premier has called on Tunisians to make some sacrifices.

Jomaa's government earlier this month proposed the remedy of public underwriting. The strategy of borrowing directly from citizens in times of fiscal crisis has been implemented twice before.

The subsidy fund also faces some changes.

To move the economy and cover the country's financial needs, the government may raise the cost of some subsided goods, such as fuel.

The plan is not winning support across the board. The left-leaning Popular Front (FP) insists that the subsidy fund remain untouched. The party drafted a budget plan of its own, suspending Tunisia's debt payments and allocating 400 million dinars to the unemployment fund.

The lack of employment opportunities is a persistent source of discontent, especially among university graduates. Many are favourable to Jomaa's foreign investment strategy.

"After three years of stagnation, Tunisia needs to launch new projects and stimulate the economy to create jobs," law student Mounira al-Arki said.

"I hope investments return to Tunisia," she added. "That's the way to get work, especially after Mehdi Jomaa said that the civil service was no longer able to accommodate the growing number of unemployed people," she told Magharebia.

Wissam Ben Moussa, 34, is among those jobless citizens.

"Tunisia is a small country and we do not have natural resources,"' he told Magharebia.

"The only solution is to bring in investors and create jobs within an environment of reasonable political stability and security," he added.

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