Tunisian Government Faces Unemployment, Financial Deficit Challenges

Tunisia-The government of Youssef Chahed, which was granted the parliament’s confidence vote late Friday, will have several complicated economic and social problems to address. On top of these are: unemployment with up to 600, 000 adults without jobs, development problems, failure to balance internal financial budgets and the rise of foreign debts.

The government is expected to discuss a short-term solution to fill the budget deficit by adopting austerity policies. Moreover, the Tunisian economy suffered in the beginning of 2016 a collapse of local currency.

Economic growth in the first half of 2016 did not surpass 1.5%, below the official target of 2.5% for the year. Unemployment rate was estimated as 15.6% during the second quarter of current year. In Tunisia, there are 629, 600 unemployed out of 4,047,000 population.

This level of unemployment requires a minimum growth rate of 6% to 7% to ensure the recruitment of the highest possible number of unemployed. Commenting on this, economist Murad al-Hattab said that Tunisia is supposed to discharge 20% of public sector employees in order to reduce wage size.

Hattab added that if this procedure is taken, public cost will decline up to 20% and this is one of the urgent demands of the International Monetary Fund (IMF) in order to permit Tunisia to take loans.

Since the revolution of 2011, debts size increased from TND25 billion (around EUR11.2 billion) too TND50.3 billion (around EUR22.6 billion). This indebtedness represents up to 53% of Gross Domestic Product (GDP), a situation that threatens more deterioration and slowdown in the Tunisian economy.

Economist Ma’az al-Joudi said that the absence of a ministry of economy in the Chahed national unity government is a negative indicator.