Tunisia

Politics:

• Analysis

  Tunisia politics: Quick View - A general strike is called after union offic

  Event

  The main union, the Union generale tunisienne du travail (UGTT), has called a national general strike for December 13th amid growing tensions between Islamists and trade unionists that have resulted in an escalation of political violence.

  Analysis

  The UGTT called the general strike in protest at attacks by several hundred militants wielding clubs and knives on its members at the UGTT's Tunis headquarters on December 4th. The union blamed the attacks on the so-called Leagues for the Protection of the Revolution, groups of militants who support Hizb al-Nahda, the moderate Islamist party that dominates the coalition government.

  The UGTT accuses Nahda of using the Leagues to suppress legitimate trade union activities. The union, along with many secular opposition parties, has demanded the abolition of the Leagues, which they see as the "armed wing" of Nahda. The Leagues denied instigating the attacks on the UGTT on December 4th, claiming instead that their own members were attacked by UGTT "militias". However, the UGTT's version of events is supported by independent journalists' reports.

  The latest violence reflects the deepening tensions between the UGTT and Nahda. The UGTT has blamed the Nahda-led government for presiding over a sharp rise in unemployment (which stands at around 18%), for failing to improve conditions for its members and for lacking a convincing strategy for economic recovery. Nahda has accused the UGTT of exceeding its role of protecting its members' employment interest by instigating social and economic unrest and trying to overthrow of the government.

  The growing physical conflict between the Leagues and the UGTT comes as the government is working hard to rein in political violence perpetrated by Salafis, ultra-conservative Islamists, who are seeking to impose strict Islamic standards of behaviour by force. There is a growing danger that political forces will opt more and more to settle their differences by force and not through the ballot box. The security services have shown themselves uncertain on how to best deal with such unrest; they were widely accused of heavy-handedness at recent violence in the city of Siliana.

  December 10, 2012

• Background

  Tunisia: Key figures

  Rachid Ghannouchi

  The founder of Hizb al-Nahda, the dominant party in the coalition government, returned to Tunisia from London on January 30th 2011, after 22 years in exile. Mr Ghannouchi has campaigned hard to portray Hizb al-Nahda as a moderate Islamist party and has likened the party to Turkey's Justice and Development Party (AKP). He was re-elected as Nahda leader for the next two years at the first congress held by the party in four decades in July. He is likely to play a significant role in shaping the policies of the party behind the scenes.

  Hamadi Jebali

  Mr Jebali was appointed by Moncef Marzouki, the interim president, as the interim prime minister in December 2011. Mr Jebali is a member of Hizb al-Nahda and started his career in the Nahda party in 1981 as the editor-in-chief of what was then a weekly newspaper of the party. Apart from being the prime minister, he remains the secretary-general of the Nahda party. He is an engineer by education. Nahda is expected to do well in the 2013 parliamentary election thereby putting Mr Jebali in a strong position to influence Tunisian politics.

  Moncef Marzouki

  Mr Marzouki founded the Congrés pour le république (CPR) in 2001. The party was banned a year later. He is a doctor and had been living in exile in France for ten years before returning to Tunisia on January 18th 2011. He was arrested several times in the 1990s because of his views on political and human rights. He was elected as the president of the present interim government by the National Constituent Assembly in December 2011. Mr Marzouki could run as a presidential candidate for the upcoming election in 2013.

  Abdessalem Jrad

  His position as the secretary-general of Tunisia's main trade union, the Union générale tunisienne du travail, puts Mr Jrad in a powerful position to shape the future of Tunisian politics because of the role played by trade unions in mobilising workers against Zine el-Abidine Ben Ali. He is seeking to extend the union's political influence and restore its power base to what it was before Mr Ben Ali shackled it.

  Bèji Caid Essebsi

  Mr Essebsi was the interim prime minister until December 2011. He was the adviser to Habib Bourguiba, Tunisia's first president, and also held some ministerial positions under Mr Bourguiba. He founded a party called Nedaa Tunis in June with the aim of encouraging secular opposition parties to unite under one umbrella. The party may get wider than expected support from secularists in the 2013 parliamentary elections given their fear of Islamic dominance.

  Mohammed Jegham

  Mr Jegham was a former interior and defence minister in the 1990s, who later fell out with Mr Ben Ali. He has set up a broad party, the Alliance nationale, that seeks to attract supporters of the Rassemblement constitutionnel démocratique. His party might well merge with Nedaa Tunis; if so, Mr Jegham could succeed Mr Essebsi as its leader. He could be influential if he can overcome the taint of association with the former regime.

  Maya Jribi

  Ms Jribi is the secretary-general of the newly established Parti republicain. This party could attract a respectable portion of the left-of-centre secular vote in the parliamentary election. If it does, it could become part of the next governing coalition but is more likely to lead the opposition.

  August 14, 2012

• Structure

  Tunisia: Political structure

  Official name

  Republic of Tunisia

  Legal system

  Based on the constitution of 1959

  Legislature

  The regime of the former president, Zine el-Abidine Ben Ali, was ousted in January 2011. Elections for a National Constituent Assembly (NCA) were held in October 2011. Cabinet positions were announced in December 2011. The NCA will also be responsible for rewriting the constitution and organising parliamentary and presidential elections

  National elections

  Next elections (presidential and parliamentary) have been set for June 2013. However, the constitution is being rewritten and any delay in this could push the elections back

  Head of state

  Mr Ben Ali stepped down on January 14th 2011, amid widespread protests. The interim head of state is Moncef Marzouki, the leader of the secular party, the Congrès pour la république. However, unlike in the regime of Mr Ben Ali, the role of the president seems to be largely symbolic

  Executive

  The cabinet is dominated by Hizb al-Nahda. The system of governance will be outlined in the new constitution, which is to be rewritten by the NCA

  Main political parties

  The major political parties include Hizb al-Nahda, an Islamist party; Congrès pour la république (CPR); Forum démocratique pour le travail et les libertés (Ettakatol); Aridha Chaabia (Popular Petition); Mouvement des démocrates socialistes (MDS); Parti démocratique progressiste (PDP); Pole démocratique moderniste (PDM)

  The government

  Prime minister: Hamadi Jebali

  Key ministers

  Agriculture: Mohammed Ben Salem

  Culture: Mehdi Mabrouk

  Education: Abdellatif Abid

  Environment: Memia Banna

  Equipment & housing: Mohammed Salmane

  Finance: Slim Besbes

  Foreign affairs: Rafik Abdessalem

  Higher education: Moncef Ben Salem

  Health: Abdellatif Mekki

  Industry & trade: Mohammed Lamine Chakhari

  Information technology & communication: Mongi Marzouk

  Interior: Ali Laarayedh

  Justice: Noureddine Bhiri

  National defence: Abdelkarim Zebidi

  Regional development & planning: Jamel Eddine Gharbi

  Religious affairs: Noureddine Khadmi

  State property & real estate: Slim Ben Hamidene

  Tourism: Elyes Fakhfakh

  Training & employment: Abdel Waheb Maatar

  Transport: Abdelkarim Harouni

  Women's affairs: Sihem Badi

  Youth & sports: Tarek Dhiab

  Central bank governor

  Chadli Ayari

  December 06, 2012

• Outlook

  Tunisia: Key developments

  Outlook for 2013-17

  • The establishment of a permanent government after elections in mid-2013 will be no guarantee of stability if the economic situation does not improve.
  • The government that emerges from the next elections is likely to be another coalition led by Hizb al-Nahda. Secular parties in the coalition would temper the post-election government's Islamist-leaning policies.
  • The downside of another coalition government is that establishing the clear policy lines wanted by local business and foreign investors will be more difficult.
  • The government is expected to pursue an expansionary fiscal policy in 2013-14. The budget deficit will average 5.4% of GDP in 2013-17, but will trend lower as the forecast period progresses.
  • We forecast that real GDP growth will be weaker than previously forecast in 2013-14, owing to worsening domestic unrest and a deteriorating trade profile. Growth will be stronger from 2015 onwards, averaging close to 5% in 2015-17.
  • Inflation will subside during 2013-15, aided by an easing in global commodity prices, but upward price pressures stemming from higher oil prices are likely to reverse this decline in 2016-17.
  • We expect the current account to remain in deficit in 2013-17, as a persistent trade deficit is only partly offset by an improving non-merchandise position in the latter half of the forecast period.

  Review

  • The government has again had to extend the state of emergency as political violence continues. Political violence is undermining stability.
  • Secular movements are unifying and are likely to become strong challengers at the 2013 election. The main party in the secular opposition, Nida Tounes (NT), is growing in popularity.
  • Tunisia has gained "advanced partner" status with the EU. The move will strengthen ties, but with Europe in recession, there is likely to be minimal benefit to the Tunisian economy in the short term.
  • The government has begun to restart the stalled privatisation programme. The sell-off is intended to raise revenue, but is unlikely to meet ambitious budget targets for what can hope to be raised.
  • The government is planning to reduce the cost of food subsidies and increase taxes on luxury goods in order to cut the budget deficit.
  • Although headline figures for tourism look good for 2012, the truth is that the sector is struggling, held back by a variety of structural constraints.

  December 06, 2012

Economy:

• Background

  Tunisia: Country fact sheet

  Fact sheet

  Annual data	2011a	Historical averages (%)	2007-11
  Population (m)	10.6	Population growth	1.1
  GDP (US$ bn; market exchange rate)	45.9b	Real GDP growth	3.0
  GDP (US$ bn; purchasing power parity)	89.9	Real domestic demand growth	2.4
  GDP per head (US$; market exchange rate)	4,331	Inflation	4.0
  GDP per head (US$; purchasing power parity)	8,487	Current-account balance (% of GDP)	-2.1
  Exchange rate (av) TD:US$	1.41b	FDI inflows (% of GDP)	6.7
  a Economist Intelligence Unit estimates. b Actual.

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  Background: Following Tunisia's independence from France in 1956, its parliament voted in 1957 to depose the bey (the hereditary ruler). Tunisia became a republic under Habib Bourguiba, who turned the country into a socially progressive but politically repressive state. In 1987 Zine el-Abidine Ben Ali became the president and ran the country on similarly autocratic lines to his predecessor. Following popular protests that began in mid-December 2010, Mr Ben Ali was forced to flee the country on January 14th 2011. The election for a National Constituent Assembly (NCA) was held on October 23rd 2011.

  Political structure: Tunisia has a new interim government following the NCA election. The former ruling party, the Rassemblement constitutionnel démocratique (RCD), was dissolved on March 9th 2011. The NCA elected the leader of the Congrès pour la république, Moncef Marzouki, as president. Hamadi Jebali from Hizb al-Nahda, the Islamist party in the interim coalition government, was appointed as prime minister by Mr Marzouki. Presidential and parliamentary elections are due to be held by June 2013.

  Policy issues: Any new government will have to pursue an expansionary fiscal policy with a focus on increasing jobs through infrastructure development (especially in less-developed regions in the interior and south of the country). Banque centrale de Tunisie (the central bank) is likely to adopt a loose monetary policy to boost liquidity, but this will increase inflation. The new government will try to keep the external deficits under control, although this will be difficult.

  Taxation: Income tax is levied at 15% for annual incomes of TD1,500 (US$1,000) or more, rising to a maximum of 35% on earnings above TD50,000. Foreign staff of offshore companies and of firms that export all their production pay a flat rate of 20%. Corporation tax is 30% for most firms. Foreign firms exporting at least 80% of production or investing in agricultural or regional development projects are eligible for full tax exemption on profits for ten years and 50% thereafter. Value-added tax (VAT) rates are 18%, 10% and 6%, with most goods charged at 18%. Consumption taxes of 10-700% apply to luxury products.

  Foreign trade: Tunisia runs structural deficits on the merchandise trade and income accounts, whereas the services and transfers accounts are generally in surplus.

  Major exports 2011	% of total	Major imports 2011	% of total
  Electrical equipment	25.1	Electrical equipment	13.3
  Textiles	21.1	Petroleum & products	12.1
  Petroleum & derivatives	14.5	Textiles	11.3
  Leather & hide products	4.1	Machinery	10.9
  Leading markets 2011	% of total	Leading suppliers 2011	% of total
  France	27.3	France	22.8
  Italy	17.8	Italy	19.0
  Germany	9.5	Germany	9.6
  Libya	6.2	Spain	5.4

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  December 06, 2012

• Structure

  Tunisia: Economic structure

  Data and charts: Annual trends charts

  
  

  

  December 06, 2012

• Outlook

  Tunisia: Country outlook

  Tunisia: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: Public dissatisfaction is growing over falling living standards, rising unemployment, ongoing social unrest on the streets and the increasing Islamisation of the state. The political and social malaise has notably worsened this year, and an increasing number of Tunisians feel that the government has betrayed the ideals of the revolution. The political situation will remain uncertain until a new constitution is agreed and a permanent government is in place.

  ELECTION WATCH: Opinion polls suggest a fall in popularity for the three coalition partners, reflecting the failure of the government to resolve the pressing social and economic problems facing Tunisia. Meanwhile, the main party in the secular opposition, Nida Tounes (NT), is growing in popularity. Although NT is likely to do well at the elections--largely at the expense of the secular parties in the current coalition--it is still not expected to be able to match Hizb al-Nahda's support base, even if that has shrunk over the past year. Therefore, the government that emerges from the next elections is likely to be another Nahda-led coalition. This would temper the post-election government's Islamist-leaning policies. However, it also means that establishing the clear policy lines wanted by local business and foreign investors will be more difficult.

  INTERNATIONAL RELATIONS: Western powers will remain uncertain about the direction of policy under the current leadership. Tunisia, under Mr Ben Ali, had long cultivated good relations with the West, especially the EU, its main trading partner. A growing strain of intolerance in Tunisia is bad for the image of the country, which depends heavily on Western tourists and investors. However, unless the government itself was to lean towards a more hardline doctrine, we expect a substantial amount of international aid to continue to flow into Tunisia. This belief is supported by the recent announcement that Tunisia has been granted "advanced partner" status with the EU. The move was long expected and will strengthen ties, although the subdued outlook for European prospects will mean that Tunisia is unlikely to gain that much economically from the deal in the short term at least.

  POLICY TRENDS: The government has published a wide-ranging plan that covers everything from democratic reform to building a balanced society. It has been criticised by opposition parties, which regard the plan as a series of aspirations rather than a realistic and pragmatic strategy. The government will focus on job creation, development of the interior regions and economic growth. The five-year development plan (2012-16) targets average GDP growth of 6.3% a year over the next five years, a target that clearly needs to be revised down in light of the euro zone crisis and domestic instability. Indeed, senior figures among the country's economic policymakers have acknowledged that growth will be below projections.

  ECONOMIC GROWTH: Growing local unrest (especially around the elections in 2013) as well as the bleak prospects for the vital EU market, will constrain economic growth in the early part of the forecast period. We forecast real GDP growth at 3.1% in 2013 and 3.6% in 2014. These levels are well below the 6%-plus growth needed to make any real dent in the unemployment numbers, which will in itself add to local resentment and possible unrest.

  INFLATION: A more stable currency and lower non-oil commodity prices will aid inflation during the forecast period. However, political and monetary policy uncertainty is likely to keep prices elevated in 2013, and high oil prices throughout the forecast period will be to Tunisia's detriment as an oil importer. After peaking at an average of 6.1% in 2012 and remaining elevated at 5% in 2013, inflation is expected to average 3.4% annually in 2014-17. The main threats to this forecast come externally from global commodity price spikes. Indeed, a pick-up in oil prices towards the end of the forecast period is expected to push inflation up a little in 2016-17.

  EXCHANGE RATES: The Tunisian dinar suffered in the first half of 2012 from the local uncertainty and the poor performance of the euro, the dominant currency in the basket to which the dinar is pegged. However, the tightening of monetary policy, coupled with a weaker US dollar following further quantitative easing, saw the dinar recover some of the lost ground in the third quarter. This improvement is unlikely to last into the forecast period, especially as the problems of the euro area are likely to continue. There is a greater chance of an improvement in the performance of the dinar later in the forecast period, in line with stronger economic fundamentals.

  EXTERNAL SECTOR: The economic troubles in the euro zone will depress demand for Tunisian goods in 2013 especially, but will remain a lingering issue in 2014 as well. In contrast, strong import growth will be driven by increased inflows of capital goods, raw materials and consumer goods. The latter has been fuelled by a sharp rise in consumer credit. Export growth will only start to outpace that of imports towards the end of the forecast period, assuming an improvement in the economic situation in the EU. Overall, the current-account deficit will narrow from 9% of GDP in 2013 to 5.1% of GDP in 2017.

  December 07, 2012

• Forecast

  Tunisia: Country forecast summary

  Country forecast overview: Highlights

  • The main task of the National Constituent Assembly will be to rewrite the constitution, thereby paving the way for free and fair parliamentary and presidential elections. These are due to be held in June 2013, but a delay is possible if the constitution is not ready.
  • Tunisia will continue to face an uncertain political environment until a stable government is in place, and quite possibly beyond. Contentious issues, such as the separation of state and religion, could delay the drafting of the new constitution, and hence the parliamentary election.
  • An additional risk is that the coalition government falls apart before the elections. This would cause a significant upsurge in instability and might require early elections with an incomplete constitution.
  • Many Tunisians are unhappy with the domestic political and economic situation, and frequent protests are set to continue. The government is expected to focus its efforts on addressing the core issues of these protests. Job creation and equal distribution of growth will be priorities for any new government.
  • Tensions between secularists and Islamists, who are calling for a constitution based on sharia (Islamic law), will continue to increase, presenting another challenge for the government, which will need to balance competing interests.
  • Plans by the former regime to reduce subsidies will be delayed, at least until after 2013. The focus will be on increasing expenditure to support large-scale projects and investment in infrastructure, especially in the interior regions, which will put pressure on the public finances.
  • The budget deficit will remain large as a proportion of GDP in the early part of the forecast period as the government looks to boost growth, but will narrow as economic conditions improve.
  • Economic growth will pick up only slowly as the forecast period progresses. A key determinant of growth prospects are conditions in the vital EU market.
  • Weak growth in the euro zone will limit its demand for Tunisian goods and reduce the number of visiting tourists. Tourism is also being affected by domestic uncertainty. However, improving services exports (mainly tourism) and stronger remittances from the recovery in Europe will bring the overall current-account deficit down in 2015-17.

  Country forecast overview: Key indicators

  Key indicators	2012	2013	2014	2015	2016	2017
  Real GDP growth (%)	2.2	3.1	3.6	4.3	5.2	5.1
  Consumer price inflation (av; %)	6.0	5.0	3.4	3.3	3.5	3.6
  Budget balance (% of GDP)	-8.9	-8.4	-6.5	-4.5	-3.9	-3.7
  Current-account balance (% of GDP)	-9.2	-8.9	-8.0	-7.4	-6.5	-5.1
  Exchange rate TD:US$ (av)	1.6	1.6	1.6	1.6	1.6	1.6
  Exchange rate TD:€ (av)	2.0	2.1	2.0	2.0	2.0	2.0

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  December 06, 2012

View detailed map

Country Briefing

Land area

162,155 sq km

Population

10.7m (2011, Institut national de la statistique)

Main towns

Population in '000s, excluding suburbs (2011)

Tunis (capital): 1,003

Sfax: 945

Sousse: 622

Kairouan: 565

Gabès: 366

Bizerte: 552

Climate

Mediterranean on the northern and north-eastern coasts, semi-arid inland and in the south

Weather in Tunis

Hottest month, August, 21-33°C (average daily minimum and maximum); coldest month, January, 6-14°C; driest month, July, 3 mm average rainfall; wettest month, January, 563 mm average rainfall

Languages

Arabic and French

Measures

Metric system. The quintal (100 kg) is used to measure crop weights

Currency

The Tunisian dinar (TD) is made up of 1,000 millimes

Time

1 hour ahead of GMT

Public holidays

All Muslim holidays are observed in accordance with the lunar calendar, and the dates are therefore approximate: Mouled, or Prophet's Birthday (February 4th 2012); Eid al-Fitr, or end of Ramadan (August 19th 2012); Hijara, or Islamic New Year (November 15th 2012)

Other public holidays: New Year's Day (January 1st); Revolution Day (January 18th); Independence Day (March 20th); Youth Day (March 21st); Martyrs' Day (April 9th); Labour Day (May 1st); Republic Day (July 25th); Women's Day (August 13th); Independence Movement Day (September 3rd); Evacuation Day (October 15th); Commemoration Day (November 7th)

March 27, 2012