Tunisia is poised for the lowest economic growth in the southern Mediterranean, with only 1.8% expected in 2025 and 2.2% in 2026. Current inflation stands at 16%, and the fiscal deficit is projected at 6.3% of GDP. The government has opted for domestic loans amidst soaring foreign debt, and foreign exchange reserves cover 3.5 months of imports.
The Tunisian economy is currently facing significant challenges due to President Kais Saied’s consolidation of power. According to the European Bank for Reconstruction and Development (EBRD), Tunisia is projected to have the lowest economic growth in the southern Mediterranean region, with estimates of only 1.8% in 2025 and 2.2% in 2026, compared to the regional growth forecast of 3.7% in 2024, increasing to 4.1% by 2026.
Macroeconomic indicators signal further difficulties ahead for Tunisia. Inflation has surged to 16% during the second half of 2024, accompanied by a fiscal deficit projected at 6.3% of GDP this year, with public payroll expenses constituting 13.3% of GDP. Additionally, Tunisia has rejected an IMF assistance package amounting to $1.9 billion, which included demands for reforms in subsidies and the civil service.
In response to the rising levels of foreign debt, which now stand at 82.2% of GDP, the Tunisian government has opted to rely on domestic loans. President Saied has extended his authority to the central bank, seeking legislative support to allow the bank to lend directly to the treasury, a strategy reminiscent of Algerian monetary policies that have historically devalued the local currency.
Despite these economic troubles, Tunisia’s foreign exchange reserves remain stable at 25 billion dinars (approximately $7.6 billion), which is sufficient to cover 3.5 months of imports. This stability may provide some buffer against ongoing economic instability, but the broader outlook remains troubling given recent fiscal trends and governmental strategies.
In conclusion, Tunisia’s economic outlook appears bleak as it faces the lowest growth rates in the southern Mediterranean owing to significant inflation, a rising fiscal deficit, and rising foreign debt. The government’s dismissal of impactful IMF aid and reliance on domestic loans heightens concerns about economic management. Without addressing structural reforms and increasing transparency, Tunisia may continue to navigate a challenging economic landscape.
Original Source: northafricapost.com
