Tunisia’s anger boils over as Covid beats the economy

Night riots by young Tunisians this week highlighted the depth of the country’s economic crisis as it grapples with growing poverty and widespread unemployment even as it is celebrated as the only democracy in the Arab world.

Violent protests swept through at least 15 towns and police clashed with teenage protesters, using tear gas and water cannons to disperse young stone throwers. Hundreds of people have been arrested and the army has been deployed to prevent looting of shops and banks.

“The protests reflect the extremely tense atmosphere in the country,” said Ons Benabdelkarim, senior partner in Tunisia of Expectation State, an international development group.

“These are teenagers protesting and there is desperation and a feeling of lack of perspective on what their future will look like. This adds to the economic stress of the pandemic and the lockdowns that make the situation flammable. “

The explosion of anger – sparked by footage of police mistreating a shepherd – comes as the country marks the 10th anniversary of the revolution that has rocked Zein el-Abidine Ben Ali, the longtime dictator.

But Tunisians are not in a festive mood, as the coronavirus pandemic has further marked an economy in difficulty for a decade.

The economy contracted by around 8% last year, according to Fitch, the rating agency – its biggest drop since independence in 1956. Economic growth since the revolution has averaged $ 1. 8% – insufficient to reduce high unemployment rates, especially among young people, where it reached 36.5% in 2020, according to the International Labor Organization.

The pandemic has decimated the crucial tourism industry, reduced exports to Europe, Tunisia’s main trading partner, and caused the closure of thousands of businesses, according to the government and international organizations. Tourism revenues fell 65% in 2020, and a recent survey by the International Finance Corporation showed 5.4% of Tunisian businesses had closed permanently due to the health crisis.

Officials have hinted that they will seek a new IMF loan because the country’s external financing needs have exploded. Fitch expects public debt to reach 89% of gross domestic product in 2021 – up from 72.5% in 2019. Increasing public spending to mitigate the impact of the virus has pushed the budget deficit to around 10%. , 5 percent of GDP, from 3.3 percent the year before, according to Fitch.

But IMF borrowing would hinge on painful reforms that previous governments were unable to implement.

“The immediate priority is to save lives and livelihoods until the effects of the pandemic diminish,” said Chris Geiregat, IMF chief of mission for Tunisia.. “[But also] restoring the sustainability of public finances is something that cannot wait and it must start this year.

Areas for reform include the civil service wage bill, which, at 17.6 percent of GDP, is “among the highest in the world”, energy subsidies and loss-making state enterprises. “When you have little or no fiscal space, you will have to strictly prioritize your spending on health and social protection and that means something has to give,” he said.

The high turnover of governments – there have been 10 since the revolution – has made reform difficult. Many have been backed by weak coalitions in fragmented parliaments in which no party holds a majority.

“Meeting IMF conditions will be difficult, given previous outbreaks between unions and government over public sector wages,” said James Swanston, Middle East and North Africa economist at Capital Economics, the London-based consulting firm.

“Given the global pandemic and the likelihood of rising consumer prices, unions could demand wage increases again and the government might think it has little choice but to succumb with pressure.

As the coronavirus exacerbated the crisis, Prime Minister Hichem Mechichi said in a November speech that the country’s economic woes were only partially caused by the virus.

“Our country has not been able to establish an economic road that allows us to emerge from the economic difficulties that we have known since 2011,” he said, highlighting what he described as “a loss. hope for the future ”illustrated by the growing number of illegal Tunisian migrants making the perilous sea voyage to Italy.

The government’s response to the protests has drawn criticism. “Poverty, marginalization and exclusion must be addressed with fairness and dignity, and not by slander and criminalization,” said the Tunisian Forum of Economic and Social Rights, a civil society group

The deterioration of the economy undermined confidence in the political system and the politicians that emerged after the revolution. This has contributed to the meteoric rise in opinion polls Abir Moussi, controversial party leader and former official of Ben Ali’s ruling party. She was able to tap into a well of nostalgia for a period of perceived economic stability under the dictatorship.

“Democracy is not yet threatened, but it must be at the service of citizens,” said Ms. Benabdelkarim.

“They have to see that it can create a better life for them. There is a risk that people will stop believing it. We’re not there yet, but the government can at least start with reforms that aren’t controversial, like cutting red tape to make it easier for foreign investors to come here.