Tunis, Asharq Al-Awsat—The biggest problem facing the Tunisian government in 2014 will be economic reform, according to former finance minister Houcine Dimassi.
In comments to Asharq Al-Awsat, Dimassi said that Tunis must find sufficient financial liquidity to propel this economic reform, adding that the Tunisian banking system was the most likely vehicle for reviving the country’s ailing economy.
Dimassi said the new government must restore confidence in Tunisia’s economy to attract regional and international investment. He stressed that this was the only way to improve conditions for government when negotiating with foreign lenders. He also highlighted the importance of political and security stability for guaranteeing quick receipt of the remaining loans from the International Monetary Fund (IMF) and the World Bank (WB).
Dimassi told Asharq Al-Awsat that reforming the country’s subsidy and tax systems, in addition to tackling the issue of financial corruption, would serve to restore the confidence of foreign countries to invest in Tunisia.
The former finance minister said that state budget resources in Tunisia in 2014 were still not clear and relied on a number of vague assumptions. This criticism comes a day after Tunisia’s Constituent Assembly began discussions about the next budget, with debate continuing over the authorities’ ability to implement the budget and provide the necessary financial resources to carry out promised developmental projects, which form the cornerstone of Tunis’ plan to reduce unemployment and kick-start development in disadvantaged areas.
Dimassi also affirmed that the Tunisian government was required to ratify the Finance Bill before the end of the year in order to protect its credibility in international markets. He criticized the 2014 draft budget that was presented by his successor, Elias Fakhfakh, describing the budget allocations as “unfair and illogical.”
As for what is needed to rescue Tunisia’s flagging economy, Dimassi told Asharq Al-Awsat that technocrat caretaker prime minister Mehdi Jomaa’s interim government must work to restore Tunisia’s phosphate sector to former levels of production. Dimassi referred to the declining level of income from this strategically important sector since the 2011 revolution that toppled the Zine El-Abidine Ben Ali regime.
Phosphate exports have declined by 46 percent, and financial losses are estimated at around 150 million Tunisian dinars (150 million US dollars). Furthermore, Tunisia has lost its traditional competitive edge over Morocco in terms of phosphate exports to important markets such as Poland, Brazil and Iran.
Dimassi also called for a solution to Tunisia’s expensive subsidy system for basic consumer goods (bread, pasta, milk, sugar, oil, and other goods). He affirmed that this constituted a significant burden on the government and said it was important that any new Tunisian government gradually reduced these subsidies.
The burden of the subsidy fund has quadrupled in the past three years, rising from 1.5 billion Tunisian dinars to around 6 billion Tunisian dinars in 2013.
The current government, led by Jomaa, is expected to lead the North African country through the transition phase until the next elections. Tunisia has gone through a serious political crisis over the past year amid increasing security threats, a mounting deficit and the assassination of two leading opposition figures.