Tunisia Shows Signs of Economic Improvement, but Growth Remains Low
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Loading... - Fleur Braam
- 28 Oct 2024
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During the 2024 Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group, Jihed Azour, Director of the Middle East and Central Asia Department at the IMF, provided an assessment of Tunisia's economic situation. While there are signs of improvement, particularly in foreign trade and agriculture, the overall growth rate remains low, necessitating structural reforms.
In an interview with TAP, Azour highlighted that Tunisia's economic growth is projected at a mere 1.6% for 2024 and 2025, the lowest among North African countries. For comparison, Egypt is expected to grow at 4.1%, Mauritania at 4.2%, Morocco at 3.6%, and Algeria at 3%. Azour emphasized that Tunisia faces significant challenges, particularly in job creation and increasing investment levels.
Azour pointed out that while the Tunisian government has made some progress in managing public expenditure, more comprehensive structural reforms are essential to stimulate economic growth. He stressed the importance of:
- Increasing Investment: To boost economic activity and create jobs.
- Job Creation: With the unemployment rate projected to reach 16.4% in 2024, addressing this issue is critical.
- Reducing Public Bank Burden: Reforms should aim to alleviate the financial strain on public banks.
- Widening Financing Options: Expanding the financing landscape to include more private sector participation.
- Addressing Inflation: Continued efforts are needed to tackle inflationary pressures.
- Reforming State-Owned Enterprises: Enhancing the role of the private sector in the economy through the reform of state-owned companies.
Regarding the status of negotiations between Tunisia and the IMF, Azour noted that there has been no recent dialogue about new financing arrangements. The previous financing program, which received preliminary approval for approximately $1.9 billion under the Extended Fund Facility, has not been finalized due to stalled negotiations at the end of 2022.
President Kais Saied's administration has expressed concerns about the nature of negotiations with the IMF, insisting that solutions should not be imposed as "diktats." Saied has called for a review of the IMF's proposals to ensure they do not exacerbate Tunisia's social crisis.
As Tunisia navigates its economic challenges, the insights from the IMF underscore the need for structural reforms and a collaborative approach to negotiations with international financial institutions. The upcoming 2024 Annual Meetings in Washington will provide a platform for further discussions on these pressing issues, with participation from a diverse group of global economic stakeholders.
