This statement reports on the latest economic data updates and political assurances from the main parties that won the legislative elections. The information does not alter the thrust of the Staff Appraisal.
1. Recent indicators remain in line with staff’s projections. New agricultural and construction data led to a small upwards revision in growth to 2.3 percent for the first half of 2014 (up from 2.1 percent), and consistent with the 2.4 percent yearly forecast. Headline inflation fell to 5.2 percent y-o-y in November, while core inflation remained unchanged at about 5 percent.
2. The government’s reform agenda has broad support from the main political parties that won the majority of seats in the October legislative elections. The economic vision deployed by the government in the September 2014 “Invest in Tunisia” conference was designed through a national dialogue and supported by a broad spectrum of political parties. The two main political parties, Nidaa Tounes—which secured 39 percent of the seats in the new Parliament and is in charge of forming the next government—and Ennahda—the party that came in second in the legislative elections with 31 percent of the votes—both communicated their commitment1 to the policies and structural reforms of the outgoing government that are supported by multilateral donors (e.g., IMF and World Bank), including on fiscal consolidation. Nidaa Tounes specifically stated that it will support the adoption of the main aggregates and key parameters of the 2015 budget law and its underlying policies. On the basis of these assurances, staff expects the draft 2015 budget to be approved by parliament in line with the key objectives outlined in the outgoing government’s Memorandum of Economic and Financial Policies.
This commitment was reiterated to staff through several verbal communications with Ennahda and Nidaa Tounes party officials. It was also noted publicly for the Nidaa Tounes party through an interview on December 4, 2014 in “Le Quotidien” by Mahmoud Ben Romdhane (a member of Nidaa Tounes#x2019;s Executive Board and President of its Economic and Social Commission), and for the Ennahda party through an interview on December 7, 2014 in www.espacemanager.com by Ridha Saidi (Former minister in charge of economic affairs and current member of Ennahda’s executive board, in charge of its socioeconomic program).