Ukrainian war, agreement with IMF: Tunisian economy caught in vices

VS■ Tunisians were afraid of it, Ministry of Industry, Mines and Energy confirmed in In March he pumped fuel prices readjusted while oil barrel prices continued to rise due to the effects of the war in Ukraine. Last week, Brent’s price fluctuated between $ 98 (Euro 88) and $ 104 (Euro 93). However, this explanation alone cannot summarize the situation in Tunisia. This is the second increase in a month and a very rare event in Tunisia, supporting the government’s intention to reform subsidies that also cover bread, electricity and sugar. Save the economy.

Read againUkraine-Russia War: How Africa Will Be Affected

Urgency to reduce the burden of offsetting hydrocarbons

Sure, Tunis hopes to sign an IMF agreement by April, but if Russia’s invasion of Ukraine causes oil to exceed $ 110 a barrel, the country’s financial reserves could be eroded sooner than expected. There is. Since the July 25 coup by President Kais Saied, who took full control after the government was dismissed, the state itself has struggled to balance its budget and has experienced a serious multifaceted crisis. It is becoming more and more difficult to maintain the level of subsidies. Suspend Congress. A 3% increase in monthly fuel prices has been mentioned by several sources.

Soaring oil prices due to the crisis in Ukraine “has a huge financial impact,” government officials told Reuters on condition of anonymity.The Department of Energy says every $ 1 increase in the price per barrel of oil Generate additional needs About 140 million dinars, or $ 48 million in the state.WhileThe 2022 budget is based on an average oil price of $ 75 per barrel. The situation is even worse, as experts say other increases in hydrocarbon prices are already planned this year. The overall question is how long the war will last and how high oil prices will be.

Read againTunisia plans a debt of € 6 billion in 2022

Serious socio-economic impact

Either way, it’s a blow to the purchasing power of Tunisians who have already experienced basic commodity price increases. “In Tunisia, when oil goes up, prices go up automatically, and when it goes down, we keep it unchanged. It feels like we’re fooled in our country,” Tunisia’s internet users said on social networks. I am commenting. Lotfi Riahi, the chairman of the Tunisian organization that provides information to consumers (Otic), is numerous. “Tunisia is experiencing very difficult economic conditions, and it is especially the citizens who are punished by these situations. We have announced to the government a new decree to ease this pressure and maintain purchasing power. I call on you to do it, “he said of Tunisia Numeric. For the Free Destourian Party (PDL), a social explosion is brewing. In a statement, the party called the head of state “ignoring Tunisia’s economic and financial priorities and ignoring the impact of the world’s general situation on the situation in Tunisia, which could cause a social explosion in Tunisia. I did. ” .. The party protested on March 13 to “request an official and detailed schedule to end the exceptional situation through a call for early elections to oppose the dissolution of parliament and the falsification of the will of the people.” I asked. ..

Read againTunisia: 100 billion dinar debt

Tunis can no longer retreat to reform

Tunisia’s economy is not doing well. And its future now depends on a future agreement with the International Monetary Fund to be signed in April. At the end of 2021, Tunisia was in debt at 100% of GDP, the trade balance was minus 413 million euros, the unemployment rate exceeded 18% and growth reached painfully 0.3%. “We are on track and will continue to discuss the possibility of financial assistance over the next few weeks,” the IMF said in a statement after a virtual visit in mid-February. Discussions with the fund are still in the preparatory stage. Institutions need to fully “understand” the reforms proposed by Tunisia in exchange for a tertiary aid program 10 years from now. Tunisia had already called for a new $ 4 billion aid program in the spring of 2021 in exchange for the IMF’s call for “thorough and structural reform.” In particular, the IMF pointed to a very high level of civil servant wage bill (16% of GDP, 650,000 civil servants) and called for a review of subsidies for basic products, especially energy. Tunisian’s powerful UGTT trade union center has already stated that it opposes freezing and reducing wages for civil servants and reducing subsidies for basic necessities.

Read againTunisia seeks help from the IMF in dire circumstances