TUNIS —
Tunisia’s crisis-stricken economy needs “deep reforms” such as slashing its
vast public wage bill, the
International Monetary Fund’s (IMF) outgoing country
chief has said as the government seeks a new bailout.
اضافة اعلان
Jerome Vacher,
speaking in an interview at the end of his three-year term as the global
lender’s envoy to the North African country, said the coronavirus pandemic had
helped create Tunisia’s “worst recession since independence” in 1956.
“The country had
preexisting problems, in particular budget deficits and public debt, which have
worsened,” he said.
Tunisia’s debts
have soared to nearly 100 percent of gross domestic product (GDP).
Its GDP plunged by
almost nine percent in 2020, the worst rate in North Africa, only modestly
offset by a three percent bounceback last year.
That is “quite
weak and far from enough” to create jobs to counteract an unemployment rate of
18 percent, Vacher said.
He said young
graduates face particular challenges in finding work, despite the country being
able to offer “a qualified workforce and a favorable geographic location”.
Since dictator
Zine El Abidine Ben Ali was toppled by mass protests in 2011, Tunisia’s
troubled democratic transition has failed to revive the economy.
President Kais
Saied sacked the government and suspended parliament on July 25 last year, and
the government has since asked the IMF for a bailout package — the fourth since
the revolution.
Tunisian
authorities say they are optimistic about reaching a deal by the end of this
quarter.
Vacher said
discussions are still at an early stage and that the IMF first wants “to
understand what they’re planning in terms of economic reforms”.
“It’s an economy
that needs very deep, structural reforms, especially to improve the business
environment,” the French economist said.
Hefty public wage
bill
But Vacher added that the government “understands the main challenges and
problems, which is already a good basis”, urging Tunisia to come up with a
“solid and credible” reform plan.
To do that, it
must tackle its huge spending on public sector salaries.
“The public wage
bill is one of the highest in the world,” Vacher said.
In a country of 12
million people, more than half of public spending goes to paying the salaries
of around 650,000 public servants — a figure that does not include local
authority wages.
Nor does the
figure include Tunisia’s hefty public companies, which often hold monopolistic
positions across sectors from telecoms to air transport and employ at least
150,000 people at the public expense.
All this drains
resources that the state could be investing in education, health and
infrastructure, Vacher said.
“There needs to be
a big efficiency drive in the public sector (to meet) public expectations in
terms of services,” he said.
The IMF has long
called for a restructuring of Tunisia’s system of subsidies on basic goods such
as petrol and staple foods, which essentially see more state funds doled out to
the biggest consumers — a system Vacher said was unfair.
The lender
recommends scrapping subsidies and instead creating a system of targeted cash
payments to needy groups.
The IMF’s
recommendations are important as not only could it lend billions more to
Tunisia, but other bodies including the
European Union have said they will
condition future aid on the global lender’s green light.
For Vacher, the
biggest responsibility lies in the hands of Tunisia’s decision-makers.
“It’s up to them
to act to find solutions, put forward reforms, a vision and an ambition,” he
said.
While many
observers have predicted doom for Tunisia’s public finances, Vacher said the
situation is “not optimal, but manageable”.
But “there is an urgent
need to make the public finances more sustainable.”
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