Experts raise alarm about Tunisia's deteriorating economy

TUNIS, Jan. 15 (Xinhua) -- With economic indicators including debt and trade deficit worsened in 2017, local experts raised alarm about the economy and called for immediate reforms in 2018.

"Tunisians rejected the new law for 2018, which increases the prices of some consumer products and taxes, exerting direct influences on people's already poor purchasing power," said Wafa Ben Abdallah, an economics expert.

The new finance law sparked a wave of anger in Tunisia throughout the past week. Protests swept across the country, accompanied by clashes at night between security guards and youths.

More than 800 people have been arrested over violence, looting and vandalism so far.

The public were dissatisfied with the rising prices of fuels, phone charging cards and some cosmetic products, while businessmen refused the increase in value-added tax (VAT) and customs tariffs on imported products.

Abdallah said that the government is now in a financial crisis, with a debt worth almost 70 percent of GDP and a budget deficit of about 6 percent.

Indeed, the decision of Tunisian government seems final, to resort to an austerity approach to find its economic benchmarks in 2018, under certain guidelines of International Monetary Fund (IMF) and World Bank.

Abdallah expected an economic growth of 2.7 percent for 2018, against the official forecast of 3 percent.

"If the hope for growth is not successful, Tunisian government will freeze recruitments in the civil service and try to curb the wage bill that reached 15,000 million dinars (6,176 million U.S. dollars), about 70 percent of the volume of state public budget," said Wafa.

According to an IMF report, the payroll in Tunisia represents almost 14.4 percent of GDP, among the highest in the world.

"The blatant depreciation of dinar, which is over 40 percent in the last five years along with the current economic situation will force the government to follow a policy of austerity," said Wafa.

The increase in the trade deficit will make things worse, as the deficit has reached 16,000 million dinars (6,575 million dollars), equivalent to the foreign currency influx of 103 days, she added.

The Tunisian expert warned against the negative repercussions of such a socio-economic situation, on industries such as tourism, the main growth engine of the country.

"I think Tunisia will be in full socio-economic and financial turbulence, if the government fails to come up with concrete and effective solutions, mainly on structural reforms of tax system, as well as fighting against tax evasion, parallel trading, smuggling and corruption." Enditem