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Tunisia’s political experience threatens economic collapse

The increasingly authoritarian Tunisian president seems determined to upset the country’s political system. The strategy not only threatens a democracy once seen as a model for the Arab world, experts say it also sends the economy into a tailspin.

The International Monetary Fund has frozen a deal to help the government secure loans to pay public sector wages and fill budget gaps made worse by the COVID-19 pandemic and fallout from Russia’s war in Ukraine.

Foreign investors are withdrawing from Tunisia and rating agencies are on alert. Inflation and unemployment are on the rise, and many Tunisians, once proud of their country’s relative prosperity, are now struggling to make ends meet.

An election debacle a week ago made matters worse: Only 11% of voters turned out in the first round of voting for a new parliament to replace a legislature dissolved last year by President Kais Saied. Opposition figures, notably from the popular Islamist movement Ennahdha, demanded his resignation and the unions threatened to call a general strike.

Saied himself designed the elections to replace and reshape parliament, part of sweeping reforms that strengthen his powers and which he says will solve Tunisia’s multiple crises. But voter disillusionment with the ruling class amid severe economic hardship contributed to a virtual boycott of the election.

Tunisia’s Western allies, such as the United States and France, have expressed concern and urged the president to engage in an inclusive political dialogue that would benefit the sluggish economy. Tunisia was the cradle of the Arab Spring democratic uprisings 12 years ago.

Saied dismissed criticism of low voter turnout, saying what really matters is the January 19 runoff. He says his reforms are necessary to rid the country of corrupt politicians and foreign enemies of Tunisia. He went after his political enemies in the Ennahdha party, which had the largest number of lawmakers in the previous parliament, and ordered the arrest this week of his vice-president and former prime minister Ali Larayedeh on charges related to the terrorism.

“Saied seems impervious to criticism and determined to fight his way to a new political system, no matter how few Tunisians are engaged in the process,” said Monica Marks, Tunisia expert and Middle East politics professor at the New York University in Abu Dhabi. .

“No Tunisian asked Saied to reinvent the wheel of Tunisian politics, write a new constitution and revise the electoral law,” Marks said. “What Tunisians are asking for is a more respectful government that meets their basic needs and gives them economic dignity.”

Saied’s promises to stabilize the economy helped secure his landslide victory in the 2019 presidential election.

But he has yet to present an economic recovery plan or strategy for his deeply indebted government to secure funds to pay for food and fuel subsidies. The president has pushed economists out of state institutions, freezing the country’s budget and deteriorating the environment for foreign investors.

Tunisians have been hit by soaring food prices and shortages of fuel and staples like sugar, vegetable oil and rice in recent months. Inflation has reached 9.1%, the highest in three decades, according to the National Institute of Statistics, and unemployment is at 18%, according to the World Bank.

“President Saied naively seems to think that if only he can complete his political roadmap, the economy will repair itself,” said Geoff Porter, a North Africa risk assessment analyst based in New York, in a recent memoir.

Tunisia reached a preliminary agreement with the IMF on a $1.9 billion loan in October. This would allow Tunisia’s heavily indebted government to access loans from other donors over a four-year period in return for sweeping economic reforms that include shrinking the public administration sector – one of the largest in the world – and a phasing out of subsidies.

The deal was subject to approval by the IMF’s board of directors, scheduled for Dec. 19. State news agency TAP reported that “the government and the IMF have agreed to postpone” the final decision on the loan in order to give Tunisian officials “more time to present a new reform plan for the economy. sluggishness of the country.

Tunisia desperately needs access to special drawing rights to avoid defaulting on its external debt and stabilize the economy, Porter said. He added: “Without IMF funds, Tunisia’s economic freefall will accelerate.

Foreign investors operating in Tunisia are worried.

Pharmaceutical manufacturers Novartis and Bayer are leaving the country because they are not being paid by the underfunded state pharmaceutical distributor.

Royal Dutch Shell, which operates two gas fields representing 40% of Tunisian national production, announced in November that it would leave Tunisia by the end of the year. Despite the hype about the country’s hydrogen sector, nothing has been done to attract investors as the country’s regulatory institutions are crippled by Saied’s policy moves, Porter said.

The president also lost tentative support from the country’s powerful union, the UGTT, for the IMF-mandated reform plan in exchange for a bailout.

UGTT leader Noureddine Taboubi agreed in August to discuss a new “social contract” to help Tunisians in financial difficulty, state news agency TAP reported. But Taboubi, whose influential union represents 67% of Tunisia’s workforce, mostly employed in the public sector, recently backtracked. He renewed his opposition to the main demands of the IMF to benefit from a loan programme: a freeze on public sector wages and the restructuring of public enterprises.

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Bouazza ben Bouazza contributed from Tunis, Tunisia.


The Independent Gt

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