The country of Jasmine has just seen its public debt reach 70% of its GDP. The national currency, the dinar, has melted by 40% and the fiscal and external deficits are reaching Olympic records. Despite this dismal post-revolutionary picture, Mehdi Jomâa, former head of the Tunisian government, remains optimistic. Beyond the uncompromising analysis he provides in this interview with Financial Afrik, the politician believes that Tunisia has always honored its commitments, including in the most difficult times. Exclusive.
What is your assessment of the Tunisian economy?
Unfortunately, based on official figures, the economic and social results are there to attest to a desperate record of government action since 2015. A record budget deficit of around 6% per year, economic growth of the most weak for more than two decades (less than 2.0% per year) despite a vertiginous increase in public spending supposed to revive the country’s economy, a record public debt that has just reached 70% of GDP with more than 8 points of increase in a single year in 2017 – unheard of in the history of Tunisia – the external accounts exploded with a current account deficit of between 8% and 10% per annum, a depreciation of the dinar of more than 40% in 3 years without any significant positive effect on the country’s economic competitiveness, and even less on exports that continue to trample, and record inflation (6.9% in 2017) compared to the last 20 years and, finally, a tax burden on businesses and citizens become absolutely unsustainable.
On the social level, the situation is worse: an unemployment rate of 15.5% for 5 years, exceeding 30% for young graduates and 45% for young women. Poverty and regional inequality have worsened compared to 2011, and purchasing power, especially among non-wage earners, has deteriorated worrisome. The middle class, formerly the spearhead of Tunisian society, is being laminated. In terms of governance: corruption, in addition to economic crime (which the government claims to tackle by confusing it with corruption) has spread everywhere and at all levels. Public sector productivity has declined by more than 50% in the last 5 years. The application of the law and respect for the authority of the state are flouted every day, the treatment of social conflicts and the settlement of problems of relationship between the state and the citizens are more and more subcontracted by the rulers – who have the legitimacy and the obligation to treat them – to various independent actors including the social partner, demonstrating if need be of the weakness not to say the incapacity of our executive and, at his head, of both Presidents.
What is the economic urgency for the current government? For the recovery of the economy, what are your proposals to boost Tunisian growth?
The quickest answer to your question is: By dint of having done nothing for 3 years (2015-2017) – other than doing politics – everything has become urgent as solutions have become more and more important. more complex. Structural problems of this magnitude can not be addressed by small, emergency actions. Let me explain a little how to Al-Badil Ettounsi (note: Tunisian Alternative, political party created in March 2017), we analyzed the situation and how we intend to solve its problems in a sustainable way.
In Tunisia, the current rulers and their political coalition (since 2015) have managed the feat of failing when they had everything to succeed: a democratic legitimacy without any dispute, an absolute majority in the parliament, a very weak opposition for not non-existent, a general state of mind – in the aftermath of the 2014 elections – ready to accept reforms and the sacrifices that accompany them, international and regional partners that are flexible and willing to help and support Tunisia, a civil society that has matured and seems to be ready to help and let go of some reforms provided that she is well informed about the problems and how to solve them, etc.
This is a golden opportunity to lift our country to the rank of democratic and free nations and to offer our people decent living conditions worthy of its revolution. The lack of leadership, the lack of political courage, the return of nepotism and clientelism, and the unlimited selfishness of ruling and governing parties are at the root of this failure and the impoverishment of the country.
Today, reviving the economic machine (and investment) is no longer a matter of simple technical measures here and there. The basic problem in Tunisia is multiple and complex. Rather, it is: how to restore the confidence of citizens, our partners and economic agents in the political and economic institutions of the country? How can we convince them that the authority of the state, through the just and firm application of the law, will be restored and maintained? How can we convince them that the state will regain its rights and that the general interest will be the only principle of conduct of public affairs? How can we convince them that corporatist and individual interests, corruption and economic crime will be fought with vigor and determination until they are completely eliminated? How can we convince them that the administration – the main thinking and implementation instrument of the executive – will be modernized and protected against the corruption and political instrumentalisation to which it is subject today? How to convince the people of our regions from the inside that they need to be more patient while they have been waiting for decades? Etc.
Straightening the situation in Tunisia will require much more than scoops or reforms taken quickly. This is what governments do after 2014: day-to-day management to address the most urgent. We need method, political courage and a simple and mobilizing vision: real leadership with ambitious but realistic plans for the country; a true and clear speech marked by a lot of pedagogy to explain and mobilize the support of the population and economic agents; a well-articulated, coherent, feasible and clearly articulated economic and social program that clearly distinguishes short, medium and long-term actions; a tight-knit team with very strong skills that can design, make decisions and implement the economic policies that are needed even if they do not please some actors without ever worrying about the political cost and its decisions: a a sort of commando of very great qualifications with a mission whose sole objective is to succeed in getting the country out of this crisis, give hope to an entire people and help Tunisia to join the group of the most economically and socially just countries .
It is therefore a whole environment and a state of mind that will have to be created to begin to earn the trust of citizens and of economic agents, including of course national and international investors. That’s Albadil’s program for Tunisia. Clearly: It takes a strong signal to begin to restore confidence, give hope to the people and solid pledges to investors and our partners. This signal can be materialized by a national dialogue on an economic stimulus program, facilitated by a group of independent high-skilled, the appointment of an independent head of government highly qualified management of public affairs and who will have the freedom to Form a government of highly experienced skills in the strategic management of public affairs to implement this program.
As I said before, the areas of intervention of such a program are numerous. The short- and medium-term priorities that could help revive the country’s national economy would be:
(i) Restore the balance of public finances to support growth and investment and help slow down inflation and public debt: rationalization of public expenditure and control of major items of expenditure with a view to reducing them in relative terms, dynamic management of the public debt, strong simplification of the national taxation and improvement of the capacity of control and recovery, rationalization of various subsidies, etc.
(ii) Encourage private investment and youth entrepreneurship: to support growth and job creation. For that, it will be necessary very quickly to eliminate all the administrative and regulatory impediments to the investment, to relieve the tax pressure on the company, to eliminate the monopoly or oligopolistic practices and to promote the competition / competition in all the productive sectors of private goods and services, initiate the restructuring of the financial sector to sustainably support the financing of the economy and in particular that of the company, setting up a development and support program for entrepreneurship and small and micro-enterprise especially in the regions;
(v) Social protection, Human capital and Employment: Improving the quality of the education system, Creating employment and Rationalizing the country’s social policy are top priorities. The implementation of these priorities will be spread over many years, but the definition of the content of the action plans for these priorities can not wait any longer. In the short term, we must therefore develop these action plans, explain them to the population and mobilize the necessary support because they will contain many substantive reforms.
Social policy needs to be rethought to improve the social coverage of the population while ensuring the financial viability of such a policy. The main reform areas will cover: the rationalization of the subsidy policy, the reform of the public and private pension system and the coverage of the health insurance scheme, the rationalization of the social security system and its financing. Employment policy is closely linked to the quality of education and growth (see above).
In the short term, in addition to the participatory preparation of the above reforms, there is a need to: redesign employment support programs to make them more effective (consolidate, eliminate, design new programs, etc.) and to improve the quality of implementation, set up a high-quality training / conversion program of high quality for unemployed graduates to better adapt their qualifications to the current needs of the labor market, launch a program to support the development of the childhood especially in the interior regions of the country (kindergartens and kindergartens) which would promote the awakening of young children and create thousands of jobs for young graduates especially women.
Finally, the mother of the reforms in Tunisia is that of the education system of the country. Quality will be the main objective and the guiding thread of any reform action in this area. It is necessary to capitalize on the numerous works that already exist to go directly into the development of the action plans, their validation by the partners and the programming of their implementation. In the short term, a plan will be initiated to upgrade the school infrastructure and equipment, the start of a continuing training program for primary and secondary teachers, the revision of curricula and teaching methods, the equipment of all ICT establishments including the provision of quality instructors, etc.
Some experts on the question believe that Tunisia’s economy is still a victim of politics. Do you share this idea?
Yes absolutely. The current policy in charge of the Executive is in the small political maneuver and the manipulation of the opinion by means of communication devices combining modern instruments (social networks) and elements of language borrowed from the Bourguibian discourse that the majority of the population Tunisian continues to venerate. The problem with the current rulers is that they still have not understood that the situation is very serious and that we must stop playing the struggles of political positioning and recovery of the state.
At no time did the Essid 1 and 2 or Chahed 1 and 2 governments articulate an overall economic program with clear and quantified objectives and concrete measures to be implemented. The Carthage Agreement – which some equate to a common agenda of a government of national unity – is a 3-page sheet of chapter headings in a very general form which, if developed, should have been an economic policy for the country. This was not the case, because the main objective of the initiator of this agreement was purely political: to calm the rising tension and to get rid of the head of government Mr Essid.
The ruling party – Nida – imploded and went into crisis in the first months following its electoral victory in 2014 – it was gone and it still can not provide the necessary political support to governments. The “legitimate” governments elected and in place since 2015 have been built to serve political purposes and not to improve the country’s economic and social situation.
Just look at their composition (lack of leadership, skills and experience, government members carry conflicting economic direction, etc. There is no program and even less political courage to convince or resist all the social and economic partners so that the general interest can prevail at any time over corporatist interests.
Tunisia has resumed the path of indebtedness, what can happen if Tunisia loses credibility as to its ability to honor its repayments of external debts? In your opinion, is this recourse to external indebtedness really a good decision to make to solve the country’s financial situation?
The use of public debt is a common practice of all governments around the world. However, this practice obeys some basic rules not to endanger the balance of public finances and the development of the country especially when one is in the process of development and without important natural resources. The public debt must finance investments and therefore development; its outstanding amount must not exceed 60% of GDP so as not to increase public spending and limit public investment; and finally, recourse to debt must be limited so as not to become habituated and easy instead of managing public resources well, to define priorities and to limit waste.
From this point of view, the recourse to indebtedness during the transition period could be justified – and still! – to perpetuate it or to accelerate it after 2014 seems to me a dangerous policy. Today, just over a quarter of our budget goes to the repayment of public debt, almost as much as the investment budget. At this stage, the government’s fiscal space is almost nil.
With the lifestyle of the current administration, we can not limit the budget deficit and even less the public debt. This is the danger that lies before us. As for the possibility of default of the country, I do not think so. Tunisia has always honored its debts even during the most difficult periods. Remember in the mid-80s. The majority of developing countries resorted to staggering and cancellations except Tunisia. Do not worry, Tunisia will honor its debts. The cost of such a policy will be borne by the population, as in the past, at the cost of less growth and more unemployment.