Middle East

Tunisians are afraid of more financial distress as important IMF discussions approach

Tunis: Every day at a family grocery store in the Tunis market, Billil Jani witnesses the reality of a severe economic crisis that has masked the recent political turmoil in Tunisia. “People here are poor,” he said, handing a small bag of olives to the customer. “Most of our customers live their daily lives. Recent monthly salaries haven’t covered a week.”

A small country in North Africa, which has been caught up in the long-standing political turmoil that President Kais Saied gained power in July last year, is also in a serious recession. Soaring prices and unemployment have hurt families who were already struggling before the coronavirus pandemic.

This week, Tunisia began preliminary talks with the International Monetary Fund on the Bailout Package. Such arrangements are likely to mean subsidies and reductions in public sector wages, and many fears will cause more suffering for the most vulnerable. It can fuel the same kind of dissatisfaction that caused a revolution 10 years ago and defeated dictator Zine El Abidine Ben Ali after 23 years of power. Due to the economic crisis since then, tens of thousands of Tunisians are seeking a better life abroad.

The birthplace of the Arab Spring

At the Halfaouine market on a winding street near the center of Tunis, Jani’s customers are already in pain. “People used to buy in kilograms,” he said. “Now they only buy absolute necessities.”

His customer, Darilla Doridi, said life was a struggle for her salary from the Ministry of Education. “I earned 1,000 dinars ($ 348, 305 euros) a month and ended up with 100 or 60 dinars left,” she said. “Now I have to borrow to reach the end of the month.” When asked when things started to get worse, she replied, “After Zine left.” Ben Ali was dominated by an iron fist. However, in late 2010, in the abandoned town of Sidi Bujid, vegetable salesman Mohamed Bujiji desperately protested and fired at police harassment.

It caused a rebellion, exiled Ben Ali and caused an Arab spring uprising in the area. But rather than tackling corruption and structural economic problems, the subsequent dysfunctional democracy was torn apart by an idealistic confrontation between Islamists and secularists. Successive governments have inadvertently tripled the wage costs of the world’s most bloated public sector in Tunisia by hiring to alleviate social unrest.

Fighting inflation

Little has been done to help poor regions of countries with very large wealth inequality, said Romdan Ben Amor of the Tunisian Economic and Social Rights Forum. Then, in 2020, a pandemic broke out and Tunisia’s economy shrank by more than 9%, but public debt surged.

The International Crisis Group think tank warned last month that the debt-bearing Treasury “cannot barely cover salaries payable to public sector workers or respect promises to repay external loans.” Since early 2020, about 80,000 SMEs have declared bankruptcy or left the country because both the government and private banks are reluctant to lend to the private sector.

“The economy is in a deep recession, debt is at unprecedented levels, and the unemployment rate is 18 percent,” said economist Ezedin Saidane. Inflation remained stubbornly high, reaching 6.6% on an annual basis in December. These rising costs have dire consequences for those who depend on salary stagnation, driving many of Tunisia’s former large middle class into poverty. “I stopped buying a lot because my salary didn’t cover it,” Dridi said.

“Waiting for sparks”

All this poses an looming challenge to President Sayed, who vowed to dismiss the government last year, seize broad power, “clean up” state institutions and rewrite the Constitution.

Ben Amor is worried that Saeed, a strict constitutional professor, “has no economic or social program.” He hasn’t met an economic expert. He meets a legal expert. But our problem is not legal, “he said. “There is a crisis, but it’s economic and social.” Ben Amor said going to the IMF with austerity should be Tunisia’s last option after the domestic solution is exhausted. Said that.

For example, he said, all large informal sectors and businesses in countries that have benefited from a pandemic are undeveloped sources of tax revenue. “The IMF sees citizens and their needs as numbers: public wage bills, interest rates, debt rates, etc.,” he said. “It doesn’t see them as people who need to eat, manage their health, travel, etc.” Ben Amor believes that the economic crisis is prone to cause great social instability. “This is like the calm before the storm,” he said. “Society is waiting for sparks, just as it happened in 2010.” -AFP

https://www.kuwaittimes.com/tunisians-fear-more-economic-pain-as-crucial-imf-talks-loom/ Tunisians are afraid of more financial distress as important IMF discussions approach

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