The Diplomatic Insight - - News -

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.

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