Tunisia has been passing by a deep and difficult economic slump since 2011, when the autocratic leader Zine El-Abidine Ben Ali was overthrown. The International Monetary Fund urged Tunisia to raise the retirement age and prices of energy to help decrease the deficit. Thereby, the country had to increase 4% fuel prices, for the third time this year.
With these attitudes, Tunisia is trying to reduce the budget deficit to 4.9 percent of gross domestic product in 2018, from about 6 percent in 2017. To reach the government’s Five-Year Development Plan 2016-20 and improve the economic situation, The Investment, Competitiveness and Inclusion Development Policy Framework was created to help.
Aiming to promote private investment, creating opportunities for small businesses and to increase energy security, The World Bank announced a new $500 million budget to support important reforms in Tunisia.
The main focus is to support concrete actions and simplify import/export procedures, facilitate the access of small businesses to credit and bid for government contracts, open sectors to investment, guarantee that social safety nets reach the poorest population and help build human capital, and create a greener and sustainable energy sector.
The implementation of the new investment laws is the beginning of the plan. This will include eliminating 27 of the 127 procedures needed to clear customs.
Government procurement will be digitized to facilitate the bid for public contracts, preparing for achieving 20% of government contracts awarded to small businesses. All the other procedures will undergo this process to make it more predictable and efficient.
“Digitizing customs procedures will mean fewer opportunities for corruption and will send a strong signal to investors that Tunisia is open for business,” said Zied Ladhari, minister of development and international cooperation.
“Along with creating opportunities for small businesses, which we know are a vital source of job creation, we also want to make sure they have access to credit by implementing the law on movable collateral. Instead of fixed collateral such as buildings or land, it will be possible to secure a loan against assets such as inventory – the only kind of assets that businesses run by young people or women tend to have,” Ladhari added.
Expanding microcredit access:
Improving the targeting and impact of social safety nets and expanding access to microcredit is also a goal. Better targeting will make implementation of the law increasing the size of payments to beneficiaries more feasible, besides support the linking of social programmes to better health and education outcomes.
It will be doubled the ceiling of microcredit loans, from 20,000 to 40,000 Tunisian Dinars to increase the number of potential beneficiaries. Recent university graduates and start-ups will be able to request the loan. It’s also planned to increase the microcredit volume loans from 731 million to 1,175 million Tunisian Dinars. Of this value, 600 million earmarked for women.
“Well designed social safety nets will play an important role in the government’s commitment to leaving no one behind,” said Marie Francoise Marie-Nelly, World Bank country director for the Maghreb and Malta. Marie-Nelly added: “Microcredits are especially important for people in less developed regions, who have fewer options for accessing credit.”
The developing of renewable energies would decrease the dependence on imported fossil fuels and promote energy security.
Recently, Tunisia requested for help to Algeria and Morocco aiming to cover the rise in energy consumption during the peak of summer. To discuss the possibility of cooperation, representatives from Morocco and Algerian had a meeting, concluding with a joint statement expressing their will to answer the Tunisian request.
The country is willing to invest $1.8 billion in renewable energy during the next 2 years and they are planning the construction of an underwater power line from Tunisia to Italy, with the capacity of 600MW and a total cost of 600 million