Following the historical events in January 2011, Tunisia became the epicenter of an unprecedented wave of political, social and economic transition in the region. As a result, the country is experiencing a period of profound transformation which has created new challenges and opportunities, particularly for the country’s economy. In addition to the growing economic ills and disparities that led Tunisians to take to the streets in protest of the former government, the economy has been further affected by the adverse immediate impacts of the revolution along with a protracted period of uncertainty and instability as Tunisians are adjusting and testing the boundaries of newfound liberties. Though Tunisia faces a number of challenges in its current economic context, the transition also presents a unique opportunity to free the economy from the bottlenecks and red tape that previously impeded its development and to establish reforms that create a climate conducive to private initiative and business. Tunisia’s good economic performance can be attributed to the implementation which helped keep the real exchange rate in line with the economy continued without disruption. In the short term, the main thrust for the Tunisian economy is to continue to country’s nascent economic recovery in an uncertain and volatile international environment. In spite of the global particularly among Tunisia’s main trading partners. In this connection, developments in the international environment need to be closely monitored in order to be able to respond quickly should potential risks materialize. Tunisia’s main objective over the medium term is to reduce unemployment and to strengthen the resiliency of the economy to external shocks, including by diversifying the export markets. The unemployment rate, is relatively high, joblessness is particularly high among young graduates and represents the most pressing challenge for the authorities. Efforts will need to be made on export economy and bring down unemployment over the medium term. In order to achieve these objectives, Tunisia intends to pursue a strategy aimed at strengthening its competiveness by supporting the emergence of new sources of growth and maintaining sound macroeconomic policies. The European Union is by far Tunisia’s largest partner, accounting for 76 percent of revenues from goods exports, 84 percent of tourism revenues, 88 percent of transfers from Tunisians abroad, and 73 percent of foreign direct seeking to expand trade beyond traditional markets in order to reduce Tunisia’s dependence on the European Union. Tunisia is actively engaged in the Maghreb integration process. Tunisia has also concluded a preferential trade arrangement with the West African Economic and Monetary Union (WAEMU) and is in talks with the Central African Economic and Monetary Community (CEMAC) as well as with several countries in Sub-Saharan Africa and in the Near and Middle East. In this connection, Tunisia is in talks with the Islamic Republic of Pakistan to conclude a preferential trade arrangement in order to upgrade the bilateral relations between them to the highest levels of cooperation and partnership. Tunisia is looking forward to stimulating growth through a program to upgrade business services, health, transport, and information technology as well as telecommunications sectors to increase their productivity before they are opened up to international competition. In order to develop such sectors, the authorities have begun reforming the university system with a view to producing more science and technology experts. Reform of the education system is part of an ambitious program to develop the high-end valueadded services sectors, such as information technologies, health, logistics, and business services. This effort will be supported by a program with the World Bank to upgrade companies in these sectors. The authorities also intend to support the modernization of the services sector by implementing an infrastructure development program that is expected to facilitate the establishment of new investors. Increasing investments and public services, especially basic ones, in the underserved regions will help reduce the gap in social welfare. The interim government which followed the revolution revised public investment allocation in favor of the poor regions, transferred additional resources to local governments in the needy regions, and adopted an outreach basic social services package in underserved regions (Circular No. 14 of May 23, 2011). These reforms should be pursued and consolidated through a broader strategic approach. In particular, increasing resource allocation for local governments will result in improved public service delivery as local governments will be more aware of the needs of the population and be more accountable to them. Moreover, both public investments and services in the hinterlands will generate jobs in the areas where the unemployment rates are highest.