Tunisia is facing a worrying financial crisis and a lack of basic products.
Tunisia has been experiencing economic problems for years that seriously affect the country. The inflation that is affecting the nation is serious, there are shortages of various basic products, unemployment is hitting the population, especially the young people, and all this is generating significant unrest among the citizens, who have already organized numerous demonstrations local in certain regions, which could generalize and take on greater importance at the national level.
Analysts say Tunisia’s political circles fear that the country’s financial problems, lack of resources and rising prices of various products could lead to larger protests than those currently taking place more locally, as highlighted by media outlets such as than Al-Arab.
Tunisia, facing its worst financial crisis in years, is seeking a new loan from the International Monetary Fund (IMF) to avoid the collapse of public finances. In the past, the IMF dictated a series of reforms for the North African nation, which have been postponed by different national governments until now, creating a complicated situation in the national economic fabric. These reforms proposed by the IMF aimed precisely at unblocking the Tunisian economic situation.
Official figures indicate that in this North African country, a third of the population is poor , that is to say that more than four million Tunisians already live in poverty or are at the poverty line. In addition, in 2022 unemployment figures exceed 16% and inflation stands at 8.6%, according to recent statistics.
Tunisia ended August with an inflation rate of 8.6%,ie 0.4% more than in July. According to the National Institute of Statistics, this boom is linked to the increase in the price of food and beverages. The value of poultry meat increased by 9.4% and that of beef by 1.6%; on the other hand, the price of eggs increased by 2.8% and that of fish by 1.8%. Like many countries in the region, due to the international context marked by the war in Ukraine, Tunisia has also experienced an increase in the price of cereal products. Inflation is also affecting the prices of furniture, household equipment and services, which rose from 10.6% to 11.3% in August, and the value of educational materials and services, which rose from 9 .8% to 10%. Other products were not as affected, with prices even falling,
Tunisia’s power, led by the nation’s president, Kais Saied, faces a major challenge after personally taking control of the nation after suspending parliamentary activity in July 2021 and beginning to rule by decree, all after that previous executives failed in their duties and eventually gave in to their inability to govern the country and accusations of alleged corruption. Even citizens who supported President Saied after his coup are complaining about the current economic situation and the inability of the executive to cope with rising prices.
President Kais Saied has proposed a series of measures aimed at addressing the country’s difficult economic situation. The Tunisian leader called for raising the standard of living of citizens to help the most disadvantaged, who have struggled to access some basic services in the fields of health, education and transport in recent years, by reforming various sectors through subsidies.
International observers have noted that Tunisia has the potential to implement some measures to end the economic recession. But to promote greater social and economic equity, the government must do more to encourage investments, subsidies and options that can generate more jobs. Fawzi bin Abdulrahman, an economist and former Minister of Vocational Training and Employment, told Al-Arab that “increasing subsidies is the right step to take, and its effects will be positive on the balance sheet, given the presence of corrupt practices in the system”.
Different sectors are showing their dissatisfaction with protests and asking the government led by Prime Minister Najla Bouden, appointed by Kais Saied, to inject more money to control prices and facilitate access to basic products and services, which is very complicated due to the financial crisis of the country, the devaluation of the Tunisian dinar and the increase in prices and the generalized crisis linked to the Russian invasion of Ukraine, which led to an increase in the price of resources energy and various raw materials and products. The suffocating local and global crisis is palpable and seriously affecting North Africa.
Increasing or reducing subsidies can greatly affect the poor and decisions made by the government can be decisive and lead or not to stronger street protests.
According to Al-Arab, observers have doubts about the fate of a large part of the funds allocated by the IMF to relieve Tunisia’s economic situation. They point out that this issue could turn the people against the government, with reports suggesting that 80% of the allowances will not reach the most needy. These experts believe that the government should be sincere about the reforms demanded by the IMF and explain them to the people so that they can see the benefits they will bring in the future.
The time is now difficult for the government of Najla Bouden to implement reforms. Tunisia, facing its worst financial crisis, is counting on the long-awaited loan from the IMF to avoid the collapse of public finances.
In this regard, the rating agency Fitch Ratings recently indicated that Tunisia is likely to obtain a new loan from the IMF, which would be the third in the last ten years, after the government and the UGTT union agree on public sector pay rises after months of disagreements.
“Tunisia will continue to benefit from international support and will be able to conclude an agreement with the IMF in the second half of 2022, thus unlocking additional financing from official creditors in November-December,” the agency said in a note.
However, the rating agency Fitch Ratings fears that the delay in closing a loan and implementing the required reforms could lead to a deterioration in debt sustainability which could lead the IMF to require a restructuring of debt, as “signs that a default is becoming more likely could lead to a downgrade to ‘CCC'”.
Najla Bouden’s government has accepted a 3.5% increase in the salaries of civil servants and employees of public companies between 2023 and 2025 and a 5% increase in the minimum wage, set at 400 dinars (around 125 euros), from next October.
Tunisia hoped to obtain a loan worth 3.6 billion euros which would make it possible to cope with record public debt, aggravated by the pandemic and the crisis in the supply of basic products such as cereals.
However, the scenario is currently difficult to undertake certain reforms. This month the government raised the price of cooking gas by 14% for the first time in 12 years and also raised fuel prices for the fourth time this year as part of a plan to cut subsidies energy, an important directive demanded by the IMF.
Public protests
National tension is high. Many demonstrators have taken to the streets of the Tunisian capital’s most deprived neighborhoods in recent days to protest against poverty, high prices and the disappearance of food from shops, in an escalation of pressure on the Tunisian authorities then that the country is facing a serious economic and political crisis.
Protesters staged riots to demonstrate their helplessness in the face of rising prices and President Kais Saied’s lack of concrete action.
During the latest protests, slogans such as “occupy freedom, national dignity”, “shame, shame, prices lit the fire” or “where is the sugar?” were chanted.
Citizens are worried about increasing food shortages in Tunisia, with empty shelves in supermarkets and scenes of Tunisians looking for sugar, milk, butter, rice and oil.
Tunisia, like other countries, is suffering a serious economic crisis accentuated by the consequences of the coronavirus pandemic, as well as the high cost of energy and other basic products due to the war in Ukraine.
The Russian invasion of Ukrainian territory worsens the food situation, as Tunisia imported half of its grain consumption from Ukraine and Russia, which aggravates runaway inflation and soaring youth unemployment. Rationing of basic goods has been in place since March due to lack of supplies, which is only worsening the protests.
Measures to contain high prices
President Kais Saied has indicated that food supply is an issue to focus on as the most basic foodstuffs, such as bread, are in short supply in stores following the above-mentioned popular protests against the shortage of products and the escalation of prices.
Kais Saied also called on the government of Najla Bouden to impose restrictions on imports of luxury goods in order to reduce the trade balance deficit with several countries, stressing the need to secure the supply of markets and to tackle the existing monopolies and abuses. He also wondered how it is possible to allow the absence of basic necessities and foodstuffs, when in other regions special animal feed is provided or cosmetics are imported from foreign companies, such as the president himself explained it in a press release issued by the Tunisian presidency.
The message was aimed at greater fairness and a sharing of responsibilities in the face of the serious economic crisis. “If there are hardships and the whole world is witnessing hardships in various sectors, then the whole nation should bear these conditions on the basis of social justice,” the statement said. “National duty demands that each side feel empowered and that we assume them as citizens who feel part of the homeland and do everything possible to overcome these crises,” the statement added.
Tunisia must generate wealth to improve the situation of its citizens and their living conditions. “Marginalized groups constitute nearly two-thirds of Tunisians, who are able to shape the country’s political landscape in the months and years to come, either by voting or by crossing the street, and if the government and the president want to stay in power, they only have to change the reality of these groups for the better or at least reassure them by giving signs of change, which we hope will be very soon, especially since the factor time weighs on the government and the president,” as activist Hatem al-Meliki pointed out.
The situation in the aftermath of the COVID-19 pandemic, combined with rising energy and grain prices due to the war, could lead to large waves of protests in the most affected countries. As Atlantic Council analyst Kamal Alam told CNBC, “Inflation and the economy, rather than political freedom, are key.” “The first and main reason for unrest in the Arab world is still the lack of economic mobility,” he added.
