New government in Tunisia

Bassem Aly , Sunday 8 Mar 2020

The formation of a new coalition government in Tunisia is an opportunity to address the country’s socio-economic ills, writes Bassem Aly

New government in Tunisia

The Tunisian parliament approved the coalition government of Prime Minister-designate Elyes Fakhfakh on Thursday by a vote of 129 to 77.

The country’s political forces had spent four months reaching a consensus on the final shape of the new coalition. Following parliamentary elections in October 2019, the Islamist Ennahda Party gained the highest number of seats.

But it did not secure an absolute majority, as Ennahda won 52 seats, the Heart of Tunisia Party gained 38 seats, and 22 seats went to the Democratic Current. The Dignity Coalition Party came fourth with 21 seats, while the Free Destourian Party came fifth with 17.

Former premier Youssef Chahed’s Tahya Tounes Party won 14 seats, coming one position after the People’s Movement, which won 15. Other political parties, coalitions and independent politicians gained less than or equal to four seats. The parties accordingly had a long road ahead of them in agreeing on the new ruling coalition.

Now that the new coalition government has been formed, Tunisian analysts say the public is hoping for socio-economic reforms.

Speaking to Al-Ahram Weekly, Mahmoud Al-May, a member of the constituent assembly that wrote the new constitution for Tunisia after the 2011 Jasmine Revolution, said that successive government in the country had been “applying austerity measures without real reforms.” But “reforms are needed,” he said, especially those targeting development and investment in disadvantaged areas.

“The first priority of the government is to integrate the parallel economy into the formal economy, as the informal economy represents more than 45 per cent of the Tunisian economy today. The second priority is fiscal evasion and corruption. Restructuring the debt, and even new debts, should be done in order to fund regional development and new investment rather than administrative expenses,” Al-May said.

Tunisia has had nine governments since 2011, but all of them have failed to solve issues of high inflation and unemployment that have led the country to resort to international loans.

Economic Reform Minister Taoufik Rajhi said in early February that he would invite representatives of the International Monetary Fund (IMF) to Tunisia for talks in March over the sixth review of the IMF loan programme. The last tranche of this was worth $247 million and was delivered to Tunisia in June 2019.

Talks on the programme were stopped in October 2019 because of the political crisis in the country. According to Reuters, Tunisia needs to borrow roughly $3 billion in 2020.

Hayat Alvi, a professor at the US Naval War College, said that Tunisia had been initiating economic reforms since its 2011 Revolution, though the pace “has been painfully slow,” especially in resolving youth employment.

“The political and economic system remains impeded by bureaucratic hurdles, which need to be significantly reduced to facilitate faster and better reforms in the economic domain. The Tunisian government and private sector have been trying hard to attract foreign direct investment, but there were major setbacks with the 2015 terrorist attacks in Tunisia,” she said. 

“The economy and especially the tourism industry started to recover slowly, but it has been too slow, and the Tunisian people have been getting impatient. With the new government in place, there is optimism that the economy will be placed on a better track. At least, that is what everyone is hoping.”

Alvi said the new government’s priority should be fighting corruption, retrieving assets stolen by the previous regime, and reducing bureaucratic obstacles to economic development, opportunities and growth.

The aim should be to reduce poverty and facilitate wealth distribution to offset the disparities between the country’s coastal areas and interior regions, she said.

Tunisia’s union and business figures played a mediating role in saving the coalition talks, and President Kais Saied threatened to dissolve the parliament and call for new elections if no deal was reached.

According to the International Crisis Group, an international NGO, the Tunisian dinar has depreciated by more than 40 per cent in relation to the euro since 2016, leading to weaker purchasing power for the Tunisian population. Inflation has reached eight per cent on an annual basis, and the cost of living has increased by more than 30 per cent since 2016.

Corinna Mullina of the New School in New York, previously at the University of Tunis, said that some parties in the new government were likely to contest IMF-dictated austerity measures such as the reduction in subsidies and privatisation of public enterprises.

But external pressures and the support of the majority of the country’s economic and political elites would lead to the start of talks about the sixth review of the IMF loan programme to Tunisia in March, she said.

“This would pave the way for another tranche of loans from the IMF, as well as other neoliberal lenders including the World Bank, the African Development Bank and the European Union. However, as in the past, it is certain there will be popular resistance from social movements and labour and other activists across Tunisian society,” Mullina said.

However, some of Tunisia’s economic indicators are going in a positive direction, the Tunisian Institute of Statistics said in February. Tunisia’s foreign-exchange reserves had risen from 84 days of imports in 2018 to about 114 days, it said, and foreign debt had declined in 2019 to 66 per cent of GDP and is expected to reach 63.4 per cent in 2020.

Tunisia’s trade deficit decreased by 19 per cent and inflation stabilised at around 5.8 per cent last month.

Tunisian central bank governor Marawan Abbasi praised the country’s tourism sector and agriculture for improvements in the stability of the currency and control over inflation.

*A version of this article appears in print in the 5 March, 2020 edition of Al-Ahram Weekly

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