As Tunisia slips further into crisis, normality is hard to come by

Tunisia economy
5 min read
09 November, 2022

"This country is in ruins,” an exasperated artist, Yassine Ben Miled, relates. “I haven’t been able to find any petrol in two days, I can’t go anywhere!” Based in Carthage, a tony suburb of the capital, he’d been unable to pick up supplies or deliver his artwork. 

The government’s inability to pay for oil imports led to nearly dry pumps and lengthy queues for several days in October. The minister in charge of energy told a radio station that panicked buyers were to blame. Almost as an afterthought, she mentioned the state’s financial troubles. 

In his way, Ben Miled, 36, embodies both the ambition and frustration felt by many in this small North African country hailed as the only Arab country to transition to democracy after the 2011 regional uprisings. 

"Public finances are unsustainable: the 2022 budget deficit is estimated at 9.7% and public debt is above 87% of GDP

In his atelier, he designs Arabic calligraphy with a novel innovation: adorned by pins, the calligraphy conveys depth. “The inspiration is Martin Luther’s 95 Theses pinned on the door of the church,” he explains. 

[photo credit: Yassine Ben Miled, @ybm_calligraphics]
An example of Yassine's calligraphy [photo credit: Yassine Ben Miled, @ybm_calligraphics]

Drawing inspiration from East and West is common here. Situated on the Mediterranean, Tunisia is a melting pot of Arab, Amazigh, and European influences. Relatively stable and educated, at first glance, the country should be doing well; but many young Tunisians find their hopes throttled by an unprecedented economic crisis. 

Shortages have afflicted the country for the better part of a year. The crisis predates the Russian invasion of Ukraine but the conflict between Tunisia’s first and second-largest grain suppliers had predictably negative consequences. The skyrocketing price of commodities drained foreign reserves and wreaked havoc on the state budget. 

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No country imports more grain per capita than Tunisia but the government has repeatedly sent back shipments due to a lack of funds. A bread shortage has upended dietary expectations. “This is not a country that can survive long without bread,” said Cyrus Roedel, a researcher who co-authored the podcast series Revolution 1: The Story of the Tunisian Uprising. “Bread is a major part of the average person’s caloric intake.” 

Bakers adapted by maintaining prices but reducing loaf sizes. Last month, however, those who run state-supported bakeries went on strike after the government failed to pay them subsidies. The subsidies allow the bakeries to keep prices low, operating at an initial loss until the state transfers cash. Without that transfer, bakeries are unable to stay in business.

The shuttering of subsidised bakeries has left privately-run shops unable to keep up with the new customers willing to fork over more dinars rather than go without bread. The Boulangerie Sidi Bou near Carthage now runs out of bread before noon. 

Dairy has similarly been affected by the war in Eastern Europe. Farmers are squeezed between high cattle feed prices and the government’s unwillingness to lift the price cap on milk. Unprofitability – operating at current levels means a 25% loss – has forced many farmers to abandon production. Milk is in short supply on market shelves. 

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“My dairy prices have gone up at least 8%,” said Marco Ouadday, the owner of Gavroche, a pastry shop. The uptick in the cost of doing business is felt everywhere but perhaps more so in the culinary sector where higher input prices compete with supply uncertainties as a source of anxiety. “Long-term planning is out of the question,” Ouadday relates. 

The list of shortages is long: Coffee, honey, and bottled water can be hard to find. Local Coca-Cola plants temporarily suspended the production of sweet drinks due to the sugar shortage. 

After repeated delays in making payments to importers and domestic producers, the full faith and credit of the government have been depleted.

In the past, the state had been able to pay suppliers in increments allowing it to spread its pocketbook to meet domestic needs. But with producers demanding payment in total upfront, supply trade-offs have become a feature of governance. 

The petrol shortage forced the state to prioritise gasoline imports, but payment for oil means that payments for other goods will be postponed. 

Public finances are unsustainable: the 2022 budget deficit is estimated at 9.7% and public debt is above 87% of GDP.

Much of the problem lies in the bloated public sector. Under pressure to bring down unemployment, successive governments used state enterprises and the bureaucracy to hire desperate but redundant employees.

Public salaries now account for half of the state expenditures. The government already spends plenty on debt services. They are taking out loans to pay for loans that have been around since the Ben Ali era, the erstwhile dictator who ruled Tunisia from 1987-2011.

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President Kaid Saied turned to the International Monetary Fund for a bailout to avoid a default on international loans. A tentative $1.9 billion loan has been negotiated, half of what Tunisia had asked for. 

IMF aid comes with stipulations to reduce subsidies and public wages. Past governments repeatedly failed to follow up on promised reforms, and it remains to be seen whether this one will be any different. The president has shown little interest in economic policy and his hand-picked prime minister, Najla Bouden, is a former geology professor (and friend of the president’s wife) with no governing experience. 

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IMF mandates are opposed by the one-million-member UGTT union, which has threatened strikes if the government moves to cut wages and subsidies. Roedel wonders if the government will use the IMF loan as a stop-gap measure and “kick the problem down the road.” 

To conserve foreign reserves for essential goods, such as food and energy, the president has restricted the importation of goods he judges unnecessary (he mentioned pet food as an example). The Tunisian Dinar (DT) depreciation means the state must convert more dinars for fewer dollars. 

Tunisians will still have to spend more dinars on goods that have to be imported, which is another blow to living standards as salaries remain stagnant.

Roughly 20% of the population lives on 16DT a day. Unemployment is more than 18%. The success story of the Arab Spring is looking bleak.

Khelil Bouarrouj is a Washington, DC-based writer and civil rights advocate. His work can be found at the Washington Blade, Palestine Square, and other publications.