Tunisia in a spiral of over-indebtedness

Tunisia is urging the IMF to face the “wall” of debt. Its finance minister is in Washington this week to start discussions with the fund in an explosive well being and social context.

In Tunisia, the vaccination marketing campaign remains to be in its infancy and hospitals are overwhelmed by the dearth of oxygen. However the prime minister believes his nation can’t afford the luxurious of recent containment to cease this third wave of air pollution. Because the economic system is disintegrating, public funds are in shambles. The industries that present labor and foreign money, tourism, textiles have been decimated by the containment that has been imposed on the complete world for simply over a yr. Because of this, social spending rose and tax revenues fell. The funds deficit in 2021 has tripled in contrast with the earlier yr, it represents 11.5% of GDP and debt now accounts for 100% of gross home product.

Can Tunisia be suspended?

It’s a menace within the medium time period. This yr, the federal government should repay at the least $ 1 billion to america. The time period shall be a lot larger in the approaching years. The extra guilt the “wall” rises and approaches, the extra pressing it’s to behave. Some specialists are in favor of debt aid or restructuring. The federal government excludes this different as a result of these results on a middle-income nation are fairly detrimental. That is delaying the return to the market and Tunisia should completely increase funds to finance its growth. The a number of worldwide assist plans granted during the last ten years haven’t been sufficient. The inside of the nation nonetheless suffers from continual underdevelopment, unemployment right now impacts nearly 2 out of 5 working folks. After receiving a $ 750 million cost facility in 2020 from the IMF as a part of the pandemic, Tunisia is now asking for a a lot bigger addition: $ 4 billion. Getting the ends to fulfill and get out of the spiral of over-indebtedness.

Do negotiations with the IMF imply accepting austerity?

The IMF, led by Bulgaria’s Kristalina Georgevia, is not any longer the one within the Eighties obsessive about the deep cuts within the international locations it helps. However its rules haven’t modified. It solely lends to international locations that comply with drastic financial savings packages. Reduce meals or vitality subsidies, for instance, recommend their specialists, whereas sustaining focused assist for the poorest. The IMF can be calling for cuts in wage prices for public companies, which symbolize greater than 17% of GDP, certainly one of the best ranges on the planet. By comparability, France, a rustic with a massive public sector, spends 13% of its GDP on the salaries of its administrations.

In its report on Tunisia revealed in January, the IMF requires a brand new social pact

A pact discovered with UGTT. The major union accepts the cuts in the general public sector, however they’re nonetheless towards privatization. That is the IMF’s third demand. As a result of Tunisian public firms are additionally extremely indebted and never very aggressive. These fund requests usually are not very authentic, they had been already on the roadmap for this system launched in 2016, however the twists and turns of the a number of crises that Tunisia goes by way of have pushed them into the background. These calls for come on the worst of instances. At present, within the face of a brand new political disaster, the Tunisian authorities should each save lives and introduce a purge of its administration, whereas avoiding impoverishing essentially the most weak. The Tunisians are giving themselves two months to succeed in a resolution with the IMF, an settlement that’s efficient for public funds and as painless as attainable for the inhabitants.


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