Tunisia faces a tough economic test after Said’s coup
Amman Today
publish date 2021-08-18 16:28:03
In the Sidi Bahri market in the capital, Tunis, shoppers have been relieved by the president’s efforts to fight corruption and defend purchasing power since he seized executive power last month, in a move his Islamist opponents called a coup.
President Kais Saied has criticized the country’s economic policy for a decade, urging traders to lower food and drug prices, and accusing unidentified businessmen of stealing billions of dollars, while police investigate corruption in the vital phosphate industry.
Azza Balawaer, 36, who works in the field of selling medical equipment, said while she was buying her needs from the Sidi al-Bahri market: “The citizen feels reassured, and the prices of everything have gone down… We feel that the president is working and targeting monopolistic merchants.”
However, three weeks after Saeed dismissed Prime Minister Hisham al-Mashishi and suspended parliament, among exceptional measures, the president has yet to appoint a new government, clarify general economic policy, or specify how he intends to finance the public deficit and pay off debts.
Economists and politicians are also questioning the president’s plans to prepare the next year’s budget, and his vision to stop the bleeding of the ailing economy.
His moves last month brought long-delayed talks with the International Monetary Fund to a halt over a loan program that was expected to make way for more economic aid and avert Tunisia’s public finance crisis.
Tunisia has paid off more than $1 billion in debt this summer from foreign currency reserves, but it will have to manage about $5 billion more; To finance its projected budget deficit, pay off more debt, and pay public sector employees.
The economy shrank 8.2 percent last year, while a deficit of 11.5 percent pushed public debt to 87 percent of gross domestic product, according to the International Monetary Fund.
The influential Tunisian Labor Union, the country’s main union, and foreign lenders see no options for Tunisia but to resume negotiations with the International Monetary Fund.
“We support negotiations with the IMF…Unfortunately we don’t have many options,” Mohamed Ali Al-Boughdiri, assistant secretary-general of the Labor Union, told Reuters.
“The clock is ticking in the face of the economic challenge,” a Western diplomat said, adding that the reforms needed to secure an IMF loan would be important in getting more help for the collapsing economy.
Such reforms, including redirecting subsidies and reducing one of the world’s heaviest public sector salaries as a percentage of GDP, do not appear to be popular, and will come at a time when the public mood is very volatile.
Growing anger over rampant corruption, mismanagement and economic stagnation, exacerbated by the COVID-19 pandemic, helped create widespread public support for Saeed’s sudden intervention on 25 July.
Successive governments failed to solve the country’s economic and social problems, and public services worsened in an unprecedented way, especially in transportation, health, and education. Governments are caught between the hammer of international lenders who demand unpopular reforms and the anvil of the labor union, which demands better workers.
As president, Saeed was responsible for foreign affairs and defense only.
Before his election, he made rare references to his economic vision, although some of his main supporters came from the political left. Saeed was repeating that he will implement what the people want from the marginalized and poor areas.
One of Said’s options might be to seek help from the Gulf states, who see his intervention as undermining the influence of the Muslim Brotherhood, which they view as a major regional enemy and close to the largest party in the now-frozen parliament.
Saeed said that he had contacts with “friendly countries” who offered to help Tunisia overcome the bad economic situation, and received envoys from Saudi Arabia and the UAE.
Economist Izz El-Din Saidan said that Gulf aid may give Saeed space for financial maneuvering.
“It allows political reforms to begin immediately, followed by economic reform by a stable government after the elections,” he added.
However, if this approach involves steps that threaten democracy in Tunisia, it may lead to the reluctance of Western lenders.
Bougdiri said Said has a real opportunity to benefit from “widespread popular support” to propose much-needed reforms to the economy, adding that the Tunisian General Labor Union (UGTT) supported introducing some reforms to state-owned companies and reviewing subsidies.
He said that the urgent reforms are to strike the corruption that has spread, confront the parallel economy, and prosecute tax evaders to revive the economy.
Saeed’s opponents describe what he is doing as ineffective measures aimed at winning the simple, and presenting himself through the image of the savior.
But Saeed is gaining popularity after he was able to bring in millions of doses of vaccines against the Corona virus, and significantly speed up the vaccination schedule. In one week, more than 1.5 million people received the vaccine.
And last week, Saeed said, while he was at a vegetable cooling center, that he would not tolerate those who monopolize commodities and cause their prices to go up. The Ministry of Commerce quickly moved and launched a digital system that allows remote monitoring of these products.
Whatever he does, Said will now be responsible for solving Tunisia’s chronic economic problems, including fiscal deficits, which could undermine the political transition he appears to be most interested in.
“Within the big picture, these events and political transitions have unleashed enormous expectations and anticipation after lean economic years, which he will not be easy to meet… He will need the help of Tunisia’s friends, and a clear and comprehensive approach,” a diplomat said.
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Source : ألدستور