Tunisia’s reluctance to embrace reforms impacts its financial position

KUALA LUMPUR - Tunisia's unwillingness to embrace necessary reforms that are beneficial to the economy has impacted the country's financial position.

Researcher and professor at Tunisian University, Dr Ayemn Boughanmi used the metaphor "five minutes more" to illustrate how Tunisia has been delaying essential economic changes for an extended period during the 10th International Islam and Liberty Conference (ILN).

He stated that its escalating public debt, which has ballooned to an alarming 85 per cent of its gross domestic product (GDP), has raised concerns among the people.

"A significant portion of this debt is external, meaning it must be repaid in hard currency, putting immense pressure on Tunisia's foreign exchange reserves," he said.

Ayemn elaborated that Fitch Ratings has downgraded Tunisia's public debt, indicating junk status with a negative outlook, and this alarming downgrade makes it increasingly difficult for Tunisia to attract foreign investment, pushing it closer to the brink of default.

"In a bid to stave off economic disaster, Tunisia engaged in prolonged negotiations with the International Monetary Fund (IMF), resulting in a staff-level agreement in October 2022," he said.

This agreement was seen as a lifeline to avoid the worst-case scenario.

However, Ayemn sarcastically said, "Our president said, ‘Mrs. Reality, please give us five more minutes’.

But that was not the case for Tunisia’s president, Kais Saied, who unexpectedly rejected the deal, citing concerns about foreign influence on tax policy, leaving the nation in dire straits.

"He doesn't accept the tax from the foreign world, and Tunisia, being a sovereign country, is going to count on ourselves without, of course, specifying which resources he intends to mobilise in order to fulfil that wish," Ayemn said.

Despite rejecting the IMF agreement, the president has not provided a clear roadmap for how Tunisia intends to mobilise the resources needed to tackle its mounting economic challenges.

Ayemn also expressed his concerns, as Tunisia does not embrace a liberal-friendly culture, which could contribute to its economic downturn.

"Tunisia is one of the most anti-liberal countries I can imagine. In terms of its culture, its elites—most of them—consider that the word liberalism itself is an insult.

"Everyone agreed; there was a consensus that Tunisia needed to change its model of development. "But having said that, no one would tell you exactly in which direction we should go," he said.

He added that the anti-liberal culture meant that the economy was ‘kind of taboo’.

"Intellectuals were absolutely against this way because, by adopting anti-liberal discourse, it was easy for them to adopt radical positions while not doing anything, and politicians were fearful of any steps that went against public opinion," he said.

As the crisis deepens and Tunisia's economic future remains uncertain, the nation's plea for "five minutes more" to Mrs. Reality becomes increasingly desperate, hoping for a resolution that can help Tunisia escape the economic guillotine it now faces.