This archive report was first published on 16 January 2022.
As Tunisia's envoy to the North African country steps down after three years, Jerome Vacher has warned of the country's economic challenges. Speaking in an interview, Vacher attributed the country's 'worst recession since independence' in 1956 to the coronavirus pandemic, which exacerbated pre-existing problems such as budget deficits and public debt.
According to Vacher, Tunisia's debts have soared to nearly 100 percent of its Gross Domestic Product, with its GDP plunging by almost nine percent in 2020, the worst rate in North Africa. The country's economy has shown a modest bounceback, but Vacher described it as 'quite weak and far from enough' to create jobs and counteract an unemployment rate of 18 percent.
Young graduates face particular challenges in finding work, despite Tunisia's ability to offer a 'qualified workforce and a favourable geographic location'. Since the toppling of dictator Zine El Abidine Ben Ali in 2011, Tunisia's troubled democratic transition has failed to revive the economy.
President Kais Saied's decision to sack the government and suspend parliament in July 2021 has led to the government seeking a bailout package from the IMF, the fourth since the revolution. Tunisian authorities are optimistic about reaching a deal by the end of this quarter, but Vacher noted that discussions are still at an early stage and that the IMF first wants to understand the government's plans for economic reforms.
According to Vacher, Tunisia's economy needs 'very deep, structural reforms' to improve the business environment. He urged the government to come up with a 'solid and credible' reform plan, which must tackle its huge spending on public sector salaries. The public wage bill is one of the highest in the world, with more than half of public spending going to paying the salaries of around 650,000 public servants.
Additionally, Tunisia's public companies, which often hold monopolistic positions across sectors, employ at least 150,000 people at the public expense. Vacher argued that this drains resources that the state could be investing in education, health, and infrastructure. He also called for a restructuring of Tunisia's system of subsidies on basic goods, which essentially see more state funds doled out to the biggest consumers.
For Vacher, the biggest responsibility lies in the hands of Tunisia's decision-makers. 'It's up to them to act to find solutions, put forward reforms, a vision and an ambition,' he said. While many observers have predicted doom for Tunisia's public finances, Vacher described the situation as 'not optimal, but manageable', but emphasized the urgent need to make the public finances more sustainable.
