Tunisia Economic Policy

Olives, one of the most important agricultural products in Tunisia

After a socialist-oriented period in the 1960’s and 1970’s, Tunisia has been focusing on increasing economic liberalization since the late 1980’s, with more than 150 state-owned companies being privatized or partially privatized since then. At that time, this gave the country an economic upturn with constant growth rates of around 5% for a long time. In 1990 the country joined the GATT and is also a member of the World Trade Organization (WTO). In 2008, a customs union with the EU, decided in 1996, comes into force. An expansion of the free trade agreement with the EU is currently being negotiated, which Tunisia placed on a list of so-called tax havens in December 2017 and removed again in early 2018. criticwarn of damage caused by the free trade law, especially for Tunisian agriculture. Despite increasing liberalization, investment policy is still set out in five-year plans. The IMF and other international donors are influencing Tunisian economic policy through extensive budget support.

The private sector complains of excessive bureaucracy, which makes it difficult for small projects and young companies to even set up a company. According to extrareference, large state companies such as the Tunisair airline have been on the verge of bankruptcy for years and are to be restructured in the coming years.

Government subsidies, especially for energy and fuels, regularly eat billions of dollars in the Tunisian budget. Reforming the system in such a way without the needy suffering from it is a great challenge with great societal power. Timid attempts were made on a small scale under the Jomaa government, but since 2011 all governments have been reluctant to tackle the critical issue. The reform of the alcohol tax, a major source of income in the country, sparked debate in 2016.

The state minimum wage was increased from 225 to 380 dinars per month (around 125 euros) after the revolution. This is hardly enough to cover a person’s livelihood, much less to support a family. According to a recent study by the Ministry of Social Affairs, around 24% of the population live in poverty, ie they live on less than the state minimum wage. Unemployment was officially 15.7% in 2013, but much higher in some inland governorates. The unemployment of academics is around 28% (2019). The largest employer is the state, but deep cuts are to be made in the inflated civil servants in the next few years.

The inflation rate was over 7% in 2018, and significantly higher for food, with the exception of subsidized goods.

The promotion of the economy and the creation of jobs are of great importance after the revolution, as the political events have caused a significant collapse in the economy. Unemployment remains one of the country’s most pressing problems. Even more than seven years after the upheaval, the Tunisian economy is not particularly competitive. The 2018 Finance Act triggered massive protests at the beginning of the year. The so-called Start Up Act, which was passed in April 2018, is intended to strengthen young companies, especially in the IT sector. Due to the corona crisis, the Tunisian government expects a recession of around 4% in 2020.

Products and production methods

One of the most important export goods is phosphate, which is mined in the mining area in the area around Gafsa. Phosphate is mainly used to make fertilizers. In addition to phosphate, zinc and iron ores are also mined. The phosphate and chemical plants are the most important employers in the region, but production has collapsed since the revolution, as production was repeatedly interrupted by strikes and transport blockades. An upcoming change to the EU import regulations threatens to make export to Europe more difficult. Other important branches of industry are textile production and processing and oil production, with Tunisia only having low oil reserves compared to other countries in the region such as Libya and Algeriadisposes.

Agriculture continues to play a major role in Tunisia. In the northeast, cereals are mainly grown. These are often exported and, in contrast, poor quality grain is re-imported. Fruits and citrus fruits grow on Cap Bon, the peninsula southeast of Tunis, while olives are mainly grown in the Sahel. A large part of the olive oil is exported, but is mostly mixed with Italian and therefore rarely comes onto the European market as Tunisian oil. For some years now, organic oils have been increasingly grown. In the south of the country are dates produced. The best are exported directly, in the country itself only second goods come onto the market. Wine is also grown in the north of the country. The negotiations on the free trade agreement with the European Union (Aleca) are viewed critically, particularly with regard to agriculture in Tunisia.

Around 350,000 people are directly employed in tourism, another 350,000 are indirectly dependent on it (e.g. manufacturers of handicrafts, souvenir dealers and restaurateurs). This makes up more than 20% of the working population. Income from tourism amounts to around 7% of GDP. However, after the attacks in Tunis and Sousse in 2015, the sector experienced a massive slump. Around half of the Tunisian hotels were closed at the end of 2015. However, not only the security situation, but also outdated structures contribute to the slump in tourism. In 2018, the numbers approached the pre-revolution level for the first time. In 2020, Tunisia was aiming for a new visitor record with nine million guests. Due to the corona crisis, however, the sector had to accept massive losses again, which the Tunisian guests could only contain to a very limited extent.

Olives, one of the most important agricultural products in Tunisia