Piecemeal assistance not the answer to Tunisia’s woes

  • 2022-08-31 10:36:37
A year ago, Tunisians gathered in front of the parliament building to voice their dissatisfaction with the Ennahda party and Prime Minister Hichem Mechichi, while supporting President Kais Saied’s invocation of an emergency article of Tunisia’s constitution and his dismissal of parliament and several key ministers. As Saied deployed Tunisia’s army onto the streets for the first time since the revolution, his abrasive style earned him the nickname “Robocop” among Tunisians, who were keen that he break the country’s political deadlock. A year on, he has consolidated power and last month ushered in a new constitution. With unemployment at 40 percent, apathy is just as high as the country lurches toward economic disaster. Tunisia’s most urgent crisis is grain, two-thirds of which it secures through imports. The war in Ukraine has severely impacted the country’s ability to import grain thanks to disruptions in the global supply and hikes in soft commodity prices. This has exacerbated the situation for the world’s second-largest pasta consumer. The situation in Ukraine is not so problematic for Tunisia from the perspective of exports as it is for national solvency. Joining the queue for highly priced cereals, Tunisia simply cannot afford the cargo. Earlier this year, the general secretary of the Tunisian Grain Office, a company responsible for storing cereals on behalf of the government, confirmed that thousands of tons of wheat were marooned offshore due to its inability to pay for the cargo. Last week, the European Bank for Reconstruction and Development agreed a sovereign guaranteed loan of €150.5 million ($151 million) to Tunisia to fund imports of soft wheat, durum wheat and barley. In Tunisia, bread, semolina, pasta and couscous are still subsidized by the government to keep prices stable and the loan represents up to 15 percent of the country’s annual consumption needs. It is part of a roadmap intended by the European Bank for Reconstruction and Development, the Tunisian Grain Office and Tunisian authorities to “improve grain sector efficiency and address some structural weaknesses,” according to the official communique. However, in reality, it does not even begin to address Tunisia’s grave challenges. Successive governments since 2011 have failed to deliver the development the Tunisian state requires. Now, the urgent requirements for public sector reform, including solutions to the employment crisis and geographic marginalization, typify a state whose mixed democratic experience has resulted in a slide toward strongman rule. The country’s modest 1.8 percent growth post-revolution shrank by almost 10 percent owing to the pandemic, during which time the dinar almost halved in value. Having budgeted based on an average oil price of $75 per barrel, the government is struggling to pay its bills and needs to borrow $7 billion more from foreign lenders and domestic sources to stimulate the country’s economy. With inflation at a 20-year high, the government’s debt will climb to 82.6 percent of gross domestic product by the end of the year, foreign debt having already hit the 100 percent of GDP mark last year. There is no doubt an international loan is needed to mitigate the government’s budget deficit, but Tunisia’s problems are as political as they are economic. A loan from the International Monetary Fund will require austerity measures, which are likely to cause a return to popular protest. It will specifically require deep changes to the economy of the Tunisian state, including cutting subsidies on basic goods and tackling the wage bill of a public sector that employs a burdensome 680,000 of the country’s 12 million people. A recent IMF working visit, though supportive of the government’s efforts to maintain macroeconomic stability, noted that high energy prices and inflation required “urgent measures to reduce these imbalances in a socially sustainable manner,” which is impossible without “the international community again playing an important role.” Piecemeal assistance, such as that from the European Bank for Reconstruction and Development, cannot prevent the economic calamity Tunisia is facing. But a complete overhaul of the public sector is required for IMF assistance to be secured. Herein lies the problem. Saied’s gradual centralization of power is at odds with the socially and politically inclusive politics that the IMF requires. Until Saied took over, Tunisia’s status as the Arab world’s only post-revolutionary democracy encouraged international assistance. However, amid the dissolution of parliament, dismissal of judges, dismantling of the unions and worsening social and regional inequalities, aid at the levels required is unlikely to be forthcoming. Should Saied be the standard-bearer of the working class, which still largely supports his onslaught against the country’s elites, he must beware not to ignore their needs or risk both their trust and that of the IMF.

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