Jérôme Vacher, representative of the International Monetary Fund (IMF) in Tunisia, during an interview with AFP on January 14, 2022 (AFP/FETHI BELAID)
In search of international financing, Tunisia must carry out “very deep reforms”, in particular to reduce the weight of the civil service which reaches one of the “highest levels in the world”, estimates Jérôme Vacher, representative of the IMF in Tunisia. .
At the end of his three-year term, Mr. Vacher recalls in an interview with AFP that Tunisia experienced because of Covid-19 “its worst recession since independence” (in 1956). He stresses, however, that “the country’s ills were pre-existing, in particular the budget deficits and a public debt (nearly 100% of GDP at the end of 2021) which have worsened”.
After a drop of almost 9% in GDP in 2020, growth returned to just over 3% in 2021 with the same expected for 2022.
However, it remains “low and very largely insufficient” to reduce an unemployment rate which exceeds 18%, and is “also high among young graduates”, considers Mr. Vacher. He observes, however, that “a skilled workforce, very good human capital and a favorable geographical location” are assets for the country.
As soon as it was formed in October — more than two months after President Kais Saied took over full powers on July 25 — Najla Bouden’s government asked the International Monetary Fund (IMF) for a new aid program.
Tunisian authorities say they are optimistic about the possibility of an IMF agreement before the end of the first quarter of 2022.
But according to Mr. Vacher, the discussions are only at a preliminary stage and the IMF first wants to “understand what their intentions are in terms of economic reforms” because “there is a need for very deep, structural reforms “.
We need “a solid and credible program (..) in the medium term and communicated to the population, even if that means explaining the difficulties”, he says.
Nevertheless, “to the extent that there is already a technical effort that has been committed” by the government and that there is “an understanding of the main challenges and the main problems, this is already a good basis for preparing and embark on a program of reforms”.
Among the emergencies, Mr. Vacher mentions the “significant weight” of the civil service (16% of GDP), the salaries of the 650,000 civil servants absorbing more than half of the State’s annual expenditure, “not counting local authorities and public enterprises”.
– “Particular situation” –
This “particular situation” of Tunisia, where “the civil service wage bill is one of the highest in the world”, even compared to Egypt, Morocco, Lebanon or Jordan, prevents the country from increase “its spending on the future, investments, education and health”, deplores Mr. Vacher.
Jerome Vacher, the IMF representative in Tunisia, says the country must carry out very deep reforms”, during an interview with AFP, January 14, 2022 (AFP/FETHI BELAID)
Another emergency: “a profound reform of public companies”, present in multiple sectors (telecoms, electricity, drinking water, air transport), often monopolistic and which employ at least 150,000 people.
There is also “a major efficiency effort to be made” in relation to “what the population expects in terms of public services”, according to the IMF representative.
The “rigidity at the budgetary level is aggravated by the weight of certain subsidies” state, he notes, underlining in particular “the unequal character of the subsidies on gasoline”.
The IMF also recommends accompanying an overhaul of the subsidy system (fuel, basic necessities) with compensation mechanisms for the most disadvantaged populations.
Moreover, the IMF is aware of the “catalytic effect” of its decisions for other donors, national and foreign, public and private, knowing that the European Union and several large countries have made any new aid conditional on a fire Fund green.
It is a responsibility for the IMF but, for Mr. Vacher, “the greatest responsibility is at the level of political decision-makers, it is up to them to act to find solutions”.
According to him, we cannot say as some assure him that Tunisia would be on the verge of financial bankruptcy: “There is a budgetary management which is done and adapts to the situation, not necessarily optimal but manageable” .
And luckily, Tunisia will not face large deadlines for repayment of its short-term debt.
© 2022 AFP
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