This paper reviews the experience of Tunisia in liberalizing its exchange system and highlights the steps envisaged for the future in decontrolling further the exchange system. The appendix provides additional background information.

This paper reviews the experience of Tunisia in liberalizing its exchange system and highlights the steps envisaged for the future in decontrolling further the exchange system. The appendix provides additional background information.

Generally speaking, exchange control in Tunisia was inherited from the colonial era. Following independence, it was strengthened and even validated by the good press enjoyed by the prevailing socialist ideology in Tunisia and the other former French colonies. According to that ideology, the quickest way to reduce the existing disparity with the industrial countries and to raise living standards for the people of the new nations was to entrust all economic power to the administration. This would create the industrial fabric required to ensure full employment and the welfare of all. The problem of how these economies fitted in with the world economy was secondary.

As time passed, the agencies responsible for supervision of the economy became increasingly important while the economic distortions and the social cost of adjustment became more and more acute. The government hesitated to take the unpopular reforms necessary, especially since several years would be required for any adjustment to show positive effects. It generally takes special circumstances, notably an external payments crisis, for a government to recognize that it has no alternative but to rehabilitate the national economy.

In Tunisia, such awareness was also facilitated by the development of thought on the issue, especially following the failure of the socialist system of development. This contributed to the strong revival of the benefits of a liberal economy. In this context, following the external payments crisis of 1986, Tunisia introduced a comprehensive adjustment program aimed at economic rehabilitation and consolidation.

Economic Restructuring and Liberalization

Before reviewing the major orientations of the adjustment program, it must be stressed that the economic policy implemented until the early 1980s had positive effects on the scope of diversification achieved and on the reduction of the economy’s degree of vulnerability. In addition to the substantial development of the tourism sector, the share of manufacturing industries in gross domestic product (GDP) rose from 7 percent in 1960 to 28 percent in 1993. Over the same period, the share of agriculture fell from 23 percent to 16 percent.

For its part, the restructuring program was aimed at removing the rigidity that hampered the operation of the market mechanism in order to increase the competitiveness of enterprises. This restructuring was designed to facilitate the integration of Tunisia’s economic activity into the world economy. The major elements of this program were as follows.

Laws governing importers were liberalized. The share of free imports increased to 90 percent of total imports in 1993, compared with only 33 percent in 1986. Over the same period, 87 percent of producer prices and 70 percent of supplier profits were liberalized.

Tax legislation was completely revised. With the introduction of a value-added tax (VAT), a large number of indirect taxes were abolished. Income tax was simplified, and the rates were reduced from more than 50 percent to a maximum of 35 percent. Taxation on savings was streamlined; all interest on financial investment, whatever the volume or the capacity of the issuer, became subject to a 15 percent withholding tax. As an incentive for risk-bearing savings, dividends were exempt from all taxes.

Financial reforms were adopted. They included (1) liberalizing lending and borrowing rates; (2) eliminating the requirement for banks to obtain prior authorization from the Central Bank of Tunisia to extend loans; (3) creating a money market; (4) financing budget deficits by issuing treasury securities under market terms, which made it possible for subscriptions to come mainly from the public, rather than from banks as before; and (5) creating savings collection agencies, such as mutual funds, investment trusts, and open-end investment companies.

It is noteworthy that the liberalization of banking activity was accompanied by a tightening of retroactive supervision by the central bank, particularly of banks’ financial structure. To this end, prudential ratios were introduced as of 1987. All of these reforms were achieved in the soundest possible context of financial stability and were supported by policies of monetary austerity and exchange rate stability in real terms.

The control of domestic demand and the recovery of exports produced encouraging results in the external payments position. The current account deficit fell from about 8 percent of GDP in 1986 to 5.3 percent in 1992. Debt parameters improved markedly, with the ratio of debt service to exports of goods and services declining to 19.5 percent in 1992, compared with 28 percent on average between 1981 and 1986. In turn, the annual average inflation rate declined from 9.5 percent in 1981 to 5.5 percent in 1992 and to 4.5 percent in 1993.

Move to Convertibility

This process of economic liberalization led to the December 1992 decision to make the dinar convertible for current account operations, in compliance with the obligations under Article VIII of the IMF’s Articles of Agreement. It must be stressed that Tunisia’s relatively limited reserves—covering 55 days of imports, compared with the internationally accepted minimum of three months—might have seemed inadequate to justify the removal of all foreign exchange restrictions. Tunisia enjoys, however, a good credit standing on the international financial markets and has ready access to drawings of up to TD 300 million (covering 20 days of imports) in the event of exogenous shocks.

This convertibility implied a major relaxation of the administrative procedures relating to the settlement of current transactions in foreign exchange by economic operators. Such a relaxation could enhance the performance of these operators, making them more competitive in foreign markets.

The liberalization measures affected such a large range of transactions that it is easier to mention the remaining restrictions on the freedom of capital flows than to list all of the transactions that were liberalized. Practically the only flows still restricted relate to Tunisians’ investments abroad, which are subject to the central bank’s prior approval.

The impact of the convertibility on expenditure in foreign exchange will barely exceed TD 40 million (6 percent of the current account deficit). This justifies the convertibility decision, which simply confirmed a de facto situation. Indeed, declaring the currency convertible has at least two advantages: (1) In itself, convertibility involves a certain standard of liberalism in an economy. There is no longer a need to take stock repeatedly of the degree of liberalization reached by each economic sector. (2) Such a declaration represents a commitment by the government to pursue restrained macroeconomic policies in preparation for full convertibility.


The next phases in establishing full convertibility are the establishment of an exchange market and the planned authorization of residents to open accounts denominated in foreign exchange. The exchange market that will be introduced in the first quarter of 1994 is essentially a market for approved resident intermediaries. Foreign exchange operations conducted on the market would be spot purchases and sales involving two foreign currencies or a foreign currency and Tunisian dinars.

Banks will be authorized to manage foreign exchange positions, for which the relevant amounts and administrative rules will be defined in a central bank circular on prudential rules for monitoring foreign exchange positions. According to these rules, the ratio of each foreign currency’s position to a bank’s net capital and reserves must not exceed 5 percent, while the ratio of the bank’s overall foreign exchange position to such net capital and reserves must not exceed 20 percent.

Such foreign exchange positions will enable banks to manage approximately 20 percent of the country’s foreign exchange reserves. As a result, the banks will become used to the prospect of full convertibility. Similarly, the foreign exchange market will make rate fixing more transparent and will ensure consistency among all monetary policy instruments, especially interest and exchange rates.

It must also be noted that the central bank will monitor trends in market rates without the need for it to publish its own rates; indeed, such publication could hamper the smooth functioning of the market. The central bank will influence the market in two ways: (1) by fixing its own rates for repurchasing from banks at the close of business any foreign exchange in excess of the authorized position; and (2) by publishing on the following day the average buying and selling rates applied by banks the previous day only as a guide.

The accounts denominated in foreign exchange that residents would be authorized to open would be transferable among residents on the foreign exchange market. This transferability will gradually make it possible to meet all residents’ foreign exchange requirements, without having to seek the central bank’s authorization each time.

Prudence should continue to be the order of the day, however, since major challenges remain. Indeed, while the pace of Tunisia’s economic growth has been considerable, it is not yet possible to deal decisively with the unemployment problem. The balance of payments is a further source of concern, given the persistence of a small but significant current account deficit (4 percent of GDP in 1993, 3.2 percent estimated in 1994). Despite a favorable climate, the trade balance is under pressure as a result of the slowdown in the export growth rate owing to the ongoing crises of Tunisia’s major trading partners. In addition, Tunisia should seek new outlets. For such an objective to be met, the sectors involved must continue to improve product quality and to enhance the competitiveness of production units.

On the external front, there are profound changes under way in the international environment, given the reorientation of financial flows toward the countries of eastern Europe. Yet it remains our objective to pursue a coherent, stringent macroeconomic policy, which is vital if the basic equilibria are to be maintained and inflation controlled. Thus, social peace—and consequently political stability—can be ensured.


The Move Toward Convertibility of the Tunisian Dinar for Current Operations

Central Bank of Tunisia

The decision to establish the current account convertibility of the Tunisian dinar in 1993, in conformity with the obligations under Article VIII of the Articles of Agreement of the IMF, represented the culmination of efforts by the Tunisian authorities to open up the nation’s economy, promote its international competitiveness, and strengthen its ability to face the challenges of development. This decision complemented and reinforced the many revisions of the Exchange and External Trade Code and its implementing provisions since the mid-1980s. These revisions were intended to simplify the procedures for economic operators and to improve the investment climate and working conditions for enterprises within the framework of a policy to liberalize the national economy.

This paper reviews the original and revised versions of the Exchange and Foreign Trade Law of 1976 and discusses the future orientation of foreign exchange policy. By way of background, it provides an overview of the main features of the Tunisian economy, traces important domestic and external financial developments, and outlines the main elements of Tunisia’s reform program.

Main Features of the Tunisian Economy

During the 1970s, Tunisia intensified its development activities. GDP grew by 7.5 percent a year, and investment, as a percentage of GDP, doubled, resulting in a fundamental change in the structure of the economy and an increase in the role of the manufacturing and tourism sectors. National saving increased, the current account deficit was limited to 4 or 5 percent of GDP, and the debt ratio declined. Contributing to the success of these efforts was a significant improvement in the terms of trade resulting from higher prices for oil, phosphates, and other exports.

The economic policy envisaged during the period was characterized by the substitution of domestic products for imports in the domestic market. This policy was based on the provision of assistance and various incentives to boost investment and production and to protect Tunisian industry, while continuing administrative management of the economy in areas such as investment, pricing, foreign trade, and finance. The main objective was to create the maximum possible number of jobs to meet a constantly increasing labor force. This policy had several negative results: (1) the orientation of production units toward the domestic market, with weak export growth; (2) a low overall factor productivity and an underutilization of productive capacity owing to excessive and sustained protection of domestic industries; and (3) a limited degree of industrial integration and a resulting increase in the demand for imported intermediate goods.

Important Domestic and External Financial Developments

In the early 1980s, the combined effects of falling oil prices, contracting external demand, appreciation of certain foreign currencies, and increasing domestic demand resulted in domestic and external financial imbalances. The budget deficit, which amounted to 6 percent of GDP, rose to 8.1 percent of GDP in 1983. The external current account deficit rose from 8.7 percent of GDP annually to 10.8 percent of GDP in 1984. Concurrently, the external debt position deteriorated and the debt-to-GDP ratio reached an unacceptable level.

These developments led to a crisis in 1986 that was characterized by (1) a marked drop in real GDP (–1.6 percent); (2) a deteriorating balance of payments position, with a current account deficit of 8 percent of GDP; (3) a rise in the debt ratio to 60 percent of GDP; (4) an increase in the debt-service ratio to 28 percent of current receipts; and (5) a rise in the government budget deficit to 5.5 percent of GDP, despite the strict measures enacted in the supplementary budget law for that year.

Analyses and scenarios formulated at that time showed that any attempt to simultaneously increase production and decrease the current account deficit while improving the debt ratios would require the rationalization of domestic demand, the promotion of exports, and the efficient use of available resources through market mechanisms. Such a plan could not ignore the investment and consumption components of domestic demand, because consumption growth and the provision of infrastructure are the most important objectives of any development activity, provided they are achieved within the framework of sound financial balances. Therefore, exports were targeted to grow faster than domestic demand, and national savings to outpace external borrowing in view of the limited and scarce resources of the economy. A strategy of this type depends in large measure on the efficient use of resources through enhanced national competitiveness, resulting in an export-oriented economy. In light of these circumstances, Tunisia adopted a comprehensive structural adjustment program that coincided with the Seventh Five-Year Plan (1987–91).

The Reform Program

The structural adjustment program included short-term measures aimed at halting the economic deterioration and creating conditions conducive to production and employment. It also included medium-term measures to address any obstacles that might impede economic development.

Among the short-term measures taken was a 10 percent devaluation of the Tunisian dinar in August 1986 to correct the overvaluation of the currency that had taken place between 1980 and 1985 and thereby improve the competitiveness of Tunisian products and facilitate access to new markets. Another measure was the adoption of a bold policy to cut public expenditure and increase revenues to correct the balance of payments position and decrease the budget deficit. The authorities also mobilized external loans on concessional terms to fill the financial gap resulting from the deterioration of the economic situation; they signed sizable loan agreements with the IMF, the World Bank, and certain friendly countries.

Medium-term measures were aimed at removing the obstacles to economic development, enhancing the role of market mechanisms, encouraging initiative, and activating the self-correcting mechanisms of the national economy. To achieve these objectives, the structural adjustment program envisaged fundamental reforms such as the liberalization of investment and prices, the privatization and restructuring of public enterprises, the reform of tax administration and of the financial and monetary systems, the liberalization of foreign trade, and the abolition of prior authorization for foreign exchange transactions.

The main results of the Seventh Five-Year Plan, which constituted a decisive turning point in the development process, were as follows.

  • Overall factor productivity improved. This indicator, reflecting the return on capital and labor, registered for the first time a positive annual increase of 2.2 percent, compared with an annual drop of 1.1 percent during the Fourth Plan (1972–76), no change during the Fifth Plan (1977–81), and an annual decline of 2.6 percent during the Sixth Plan (1982–86). This improvement was reflected in a better use of productive capacity. The economy grew at an annual rate of 4.2 percent while investment increased by only 0.5 percent a year (in constant prices) and consumption rose by not more than 2.7 percent a year in the absence of a pronounced growth in GDP.

  • Exports increased annually by about 10.8 percent in constant prices during the period, compared with an ambitious initial target of a 5.3 percent annual increase. Export promotion activities encompassed traditional sectors, for example, agricultural and food products, phosphates and derivatives, textiles, tourism, as well as new sectors that were not previously exporting, for example, building materials and certain mechanical and electrical products. The flexible exchange rate policy, along with efforts to enhance market mechanisms and to improve the overall economic environment, helped in achieving these objectives. The growth in output relied mainly on exports, rather than on inward-oriented sectors as in the past.

  • Domestic and external financial balances improved markedly. The current account deficit did not exceed 2.9 percent of GDP, compared with a target of 4.8 percent of GDP in the plan and a deficit of 8 percent of GDP in 1986. The budget deficit fell from about 6 percent of GDP during the Sixth Plan to 3.8 percent of GDP during the Seventh Plan. The discipline on the expenditure side reversed the previous trend, which had been characterized by a faster rate of growth of expenditure than that of revenue. Although this result exceeded the deficit foreseen in the plan (2.1 percent of GDP), it was nevertheless encouraging in view of the pressure on the budget caused by such adverse factors as drought, locusts, floods, and the Persian Gulf war.

  • The debt structure showed continuous improvement, accompanied by a sustained decline in the debt-to-GDP ratio. The share of long-term loans in the debt stock increased from about 60 percent in 1986 to about 77.5 percent in 1991, as foreign resources made available in the context of structural or sectoral adjustment programs helped reduce the share of medium-term loans at commercial terms. More important, the debt-to-GDP ratio fell by about 7 points of GDP (from 59.5 percent of GDP in 1986 to 52.6 percent of GDP in 1991) and the debt-service ratio decreased from 27.9 percent to 21.8 percent of current revenues during the same period.

Despite these positive results, and because the reform process was not completed, a number of weaknesses became apparent during the last year of the plan, given the adverse impact of the Persian Gulf war. The resulting financial imbalances required immediate action. Investment performance was uneven during the period of the Seventh Plan. After a contraction in the first two years of the plan (by 10.1 percent in 1987 and by 4 percent in 1988 in constant prices), the authorities took measures to increase and promote investment by easing the social burden on enterprises and by simplifying procedures and administrative regulations. In addition to improving the overall economic conditions, these measures helped restore investors’ confidence, resulting in a recovery in investment during 1989 and 1990 (with a 12.4 percent increase in 1989 and 19.1 percent in 1990). This rate of increase dropped, however, in 1991 to only 3 percent because of the adverse effects of the Persian Gulf war.

Regarding the fiscal balance, the pressure on the fiscal position was more severe than expected because of an increase in some public expenditure items (e.g., the wage bill) that exceeded earlier estimates because of higher world prices and product subsidies. Nonbudgeted expenditures also rose because of the adverse effects of two years of drought in 1988 and 1989, damage caused by floods, and the Persian Gulf war. Immediate measures were, therefore, required in the context of supplementary budget laws to preserve fiscal balance. With these constraints, the objective of narrowing the budget deficit from 5.5 percent of GDP in 1986 to 1.5 percent in 1991 could not be achieved. The budget deficit was at 3.9 percent of GDP in 1991.

The results of the structural adjustment program seem mixed, but they clearly reflect the positive aspects of steady and courageous reform efforts. Despite the severe circumstances surrounding the implementation of the program, the authorities were able to exceed expectations by achieving an annual growth rate of 4.2 percent. Investment recovered during the final years of the Seventh Plan after following a relatively lengthy decline, the financial crisis faced by the country in the mid-1980s was reversed, and an improvement in debt ratios was achieved. These gains formed a sound basis for launching the Eighth Five-Year Plan (1992–96). The volatile international environment made consolidation of these gains imperative.

The turning point in the development process was 1992, when the Persian Gulf crisis was over. Economic activity picked up, and the reform process was intensified at all levels. Accordingly, good results were achieved in 1992 with respect to growth, price decontrol, and budgetary adjustment. The balance of payments came under pressure owing to a decline in exports and an increase in imports in the last months of the year.

Real GDP grew by 8.1 percent in 1992, as compared with 3.9 percent in 1991. The authorities adopted a fiscal policy stance aimed at mobilizing resources and rationalizing expenditures and were thus able to limit the budget deficit to 2.8 percent of GDP. The authorities also pursued a restrictive financial policy and carried out many monetary and financial sector reforms. This policy yielded generally positive results. The money stock grew at moderate rate of 8.2 percent in 1992 and remained at 14.3 percent of GDP. This helped control inflation; prices increased by 5.5 percent in 1992, compared with 7.8 percent in 1991.

Constraints on external payments were more severe than expected. The current account deficit rose to 4.8 percent of GDP in 1992, compared with 4.4 percent of GDP in 1991. The deterioration in the terms of trade alone increased the current account deficit by 1.1 percent of GDP. Nevertheless, debt ratios continued to improve. The debt-service ratio declined to 19.1 percent of current receipts, compared with 20.1 percent in 1991, and the debt ratio dropped to 49.4 percent of GDP, compared with 52.9 percent in 1991.

The improvement in these indicators allowed the authorities to announce the convertibility of the dinar for current account operations. The announcement of this decision at the beginning of the plan demonstrated the authorities’ intention to liberalize and open up the economy and to strengthen its structure.

Main Areas of Economic Reform and Liberalization

The reform and liberalization measures of the Eighth Five-Year Plan (1993–96) covered many areas, including the following.

(1) The requirement for prior approval for obtaining foreign exchange was removed. Administrative procedures were simplified, and investment in agriculture, industry, services, tourism, and other sectors were liberalized.

(2) Various concessions were granted to boost private sector investment. The system of concessions and incentives was revised, and a unified law on investment was drafted that took into account national priorities, in terms of selectivity and proper use of resources.

(3) A comprehensive reform of the tax system and of the tax administration was initiated using a new, modern system characterized by simplicity, transparency, and lower tax rates. A value-added tax was introduced with only three rates (6 percent, 17 percent, and 29 percent) along with a unified income tax return, a single corporate income tax return, and a maximum profit tax rate of about 35 percent. Capital gains were exempt from income taxation to avoid tax duplication. Custom duties were adjusted downward from a maximum rate of 200 percent to 41 percent to ensure reasonably effective protection. A law was drafted to incorporate all tax provisions and thus ensure greater harmony and consistency.

(4) The gradual liberalization of prices was initiated at the levels of production and distribution. This was done in recognition of the role of prices in enhancing competition and efficiency.

Prices of agricultural products were revised and significantly increased on a number of occasions. This prevented the artificial freezing of these prices, while concurrently providing a minimum degree of protection for domestic products. The legal framework was also revised, and two laws were adopted: one on free competition and prices and the other on marketing and trade. The authorities made extensive efforts to control the costs of subsidies, either by adjusting prices or by taking specific and structural measures to contain them within reasonable limits.

The percentage of free prices in terms of production reached 87 percent by the end of January 1993. The only exceptions were subsidized goods and monopoly products. Free prices constituted 70 percent of the goods and services distributed. It will continue to apply fully to unsubsidized goods and services or to goods and services that are insufficiently competitive by the end of 1994.

Parallel to price liberalization, under Law No. 91/64 of July 1991, the number of price-fixing mechanisms has declined since January 1992 from five to three (involving absolute freedom, self-determination, and administrative determination).

(5) A program was introduced to privatize and restructure public enterprises. This took place in the context of a review of the state’s role in the economy. This review concluded that government intervention should be limited to the infrastructure and strategic sectors. Under the previous plan (1987–91), provisions were made to reduce state control of public enterprises by expanding their boards of directors, substituting a posteriori supervision for a priori supervision, and ensuring flexibility in the conclusion of agreements that determine relations between the state and enterprises. The authorities reviewed the structure of public enterprises. Out of 95 enterprises studied by the end of 1991, 28 were totally privatized and 11 were partially privatized. This process dealt primarily with the tourism and textile sectors. In addition to safeguarding jobs as far as possible, it provided the state with additional resources and helped reform a number of public enterprises.

(6) Foreign trade liberalization was treated as a priority, with import liberalization seen as a prerequisite to the creation of favorable conditions for competition and efficiency. Emphasis was also placed on increasing exports to achieve the objectives of growth and employment. Under the previous plan (1987–91) restrictions on more than two thirds of imports of raw materials and semiprocessed goods had already been removed and the organizational and promotional framework for exports enhanced. These actions enabled exporters to face increasing foreign competition and to enter new markets, but the pace of removal of restrictions on imports during that period slowed down as a result of unfavorable external factors. Hence the Eighth Plan sought to lift restrictions on all imports by 1994, except on some essential items or luxury goods. By the end of 1992, 87 percent of the items in question had been liberalized. Accompanying measures such as the adjustment of customs tariffs and the harmonization of the various rates, including duties on raw materials and finished products, were enacted to restrict unfair competition. A compensatory rate was introduced to discourage illegal import transactions.

(7) The monetary and financial systems were reformed to promote competition and to give financial institutions more freedom in resource mobilization and investment. The reform process entailed a variety of measures to strengthen the financial market including (1) liberalizing interest rates; (2) liberalizing the money market by eliminating the requirement of prior central bank authorization for its lending operations; (3) creating new negotiable financial instruments, such as certificates of deposit, shares, and treasury bonds; and (4) frequent changes in the system of preferential loans. The procedures for foreign exchange transactions were also improved.

(8) The value of the Tunisian dinar was adjusted, insofar as some flexibility with respect to the fixing of its exchange rate was introduced in 1986. In their monitoring of changes in the exchange rate of the dinar against the currencies of trading partners, the monetary authorities relied on an indicator of real and nominal effective exchange rates weighted by current receipts from the export of goods and services. Between the time of the adjustment in the value of the dinar in 1986 and the end of 1987, this indicator moved downward, as intended by the monetary authorities, to reverse the appreciation of the dinar. The authorities have since then maintained the stability of the real exchange rate of the dinar at the level recorded at the end of 1987.

(9) The 1989 formula for covering term payments for importers and exporters of goods and services was adjusted. The maximum period of coverage was increased from 8 to 12 months for importers (compared with 6 to 8 months in 1986) and from 6 to 9 months for exporters (compared with 3 to 6 months in 1986), to eliminate related exchange risks. This system was extended to include nonresidents among all service providers.

A system was established to protect borrowers against exchange risks resulting from the repayment of loans and interest in foreign currency. This system gives the borrower the option of purchasing the currency from the central bank, which guarantees, for purchase on a specific date, a predetermined exchange rate called a “stipulated rate.” Benefits may be drawn from any positive movement of exchange rates.

Call option securities are available through authorized intermediaries for periods of 3 to 12 months. The purchaser pays a premium, to be determined on the basis of the central bank’s rate, which is based on the expected rates of the U.S. dollar, the French franc, and the deutsche mark on the date of the option contract.

Exchange and Foreign Trade System, 1976–93

The Exchange and Foreign Trade Law was enacted in 1976, and the Executive Order No. 608-77 governing its implementation was issued on July 27, 1977. This Executive Order was revised in 1987, and the following two important modifications were made.

  • Residents were no longer required to transfer from abroad their income and earnings in foreign exchange not derived from export operations or from the provision of services. They would be allowed to deposit such resources in special accounts denominated in foreign exchange or convertible dinars.

  • Residents with foreign exchange resources would be allowed to open professional accounts, denominated in foreign exchange or convertible dinars, in which they could deposit all or part of such resources to cover their professional foreign exchange expenses.

Exchange Regime
Payments for Current Account Transactions

The general principle is that no current transaction should be made without prior authorization of the central bank, through its branches, on the basis of proper documentation. As an exception to this principle, authorized intermediaries are allowed to make transfers in the following categories:

  • Subscriptions to scientific, professional, charitable, and cultural associations.

  • Subscriptions to magazines and periodicals.

  • Savings of nonresidents working in the private sector equal to 50 percent of their net wages and salaries. For other workers, amounts that may be transferred are usually specified in their employment contracts in the context of bilateral agreements for technical, cultural, and scientific cooperation.

  • Reinsurance surpluses registered between resident and nonresident insurance companies.

  • Repayment of the principal and interest on foreign debt and all related expenses, with the exception of suppliers’ credits (which are repaid through commercial arrangements).

  • Bank expenses and interest payable by banks to nonresident banks that are not their correspondents.

  • Interest and dividends, compensation of board members, and bonus shares.

  • Expenses for business and tourist travel and for scholarships abroad, within a range to be determined from the disbursement authorization issued by the Ministry of Finance.

In addition, exporting institutions in the industrial, trade, and service sectors are free to transfer all expenses in currencies related to their export activities. Institutions that are partial exporters of goods and services may freely use 10 percent of their foreign exchange revenues to cover their expenses.

Opening of Nonresident Accounts

According to an Exchange Order issued in 1982 and modified by two Orders issued in 1983 and 1984, nonresidents may open the following accounts and books.

  • Foreign accounts in convertible dinars may be opened freely at authorized intermediaries and used without prior authorization to purchase foreign exchange from the central bank, to transfer funds (in convertible dinars) to another foreign account or to make payments in Tunisia.

  • Foreign accounts in convertible currencies may be opened freely at authorized intermediaries and used without prior authorization from the central bank to transfer such convertible currencies to the latter or abroad, or to provide currencies to the account holders or any other beneficiary, resident, or nonresident for the purpose of business travel abroad if that person is a permanent representative or employee of an account holder. Such accounts may also be used to transfer funds to other foreign accounts.

  • Special accounts in Tunisian dinars for deposits in dinars may be opened by nonresident institutions doing business in Tunisia. These accounts may be opened automatically once the central bank has approved any transactions for which they were opened.

  • Domestic accounts may be opened at authorized intermediaries, without prior authorization of the central bank for individuals residing temporarily in Tunisia. These accounts may be freely funded by convertible currencies from abroad or by revenue accruing to account holders in Tunisia for services rendered locally. These accounts may also be credited with (1) funds reimbursed on or before the dates specified in contracts for Tunisian or foreign movable assets, recorded on domestic books opened in the name of the account holder; (2) payments for purchases of Tunisian movable assets in the Tunisian stock exchange; (3) repayments of loans previously extended in dinars from the domestic nonresident accounts in question; and (4) transfers from other nonresident domestic accounts opened in the name of the account holder.

These nonresident domestic accounts may be debited, without prior authorization of the central bank, with amounts necessary to cover the expenses of the account holders and their families in Tunisia and the expenses of maintaining any properties they may have in Tunisia. These accounts may also be debited to subscribe to short-term Tunisian bonds and notes provided these bonds and notes are placed on domestic books for nonresidents opened or to be opened in the name of the account holder. These accounts may be debited if the holder wishes to extend loans in dinars to Tunisian residents or to provide funds to other domestic nonresident accounts opened in the name of the account holder.

  • Pending accounts and books may be opened for the recording of funds in Tunisian dinars and movable assets whose status has not yet been determined by the central bank. These accounts and books may be opened without the prior authorization of the central bank of Tunisia. The funds may be used freely, but authorized intermediaries should not pay interest on them. These pending accounts may be used without prior authorization of the central bank to carry out transactions, the most important of which are purchases of movable assets and payments on behalf of Tunisian public enterprises and departments.

  • Capital accounts may be opened in the name of foreign nonresident individuals or corporations, without prior authorization of the central bank, to accept funds in nonconvertible dinars. These accounts may be used without the central bank’s authorization to cover expenses related to the management of profits accruing to nonresidents from the sale of Tunisian movable assets or real estate.

Accounts and Books in Foreign Currencies and Convertible Dinars

Resident individuals and corporations working in Tunisian institutions, whether Tunisians or foreigners, may open the following accounts.

  • Professional accounts in convertible dinars may be opened with the central bank’s authorization in the names of income earners. These accounts may be used according to conditions stipulated in the respective authorizations for their opening.

  • Professional accounts in convertible currencies may be opened with prior authorization for exporters whose export earnings exceed 15 percent of their sales and whose activities are subject to the investment law governing such sectors as manufacturing, agriculture, fisheries, foreign trade, and services. These accounts may be funded by 20 percent of revenues in convertible currencies, so that exporting institutions may deal with exchange risks. Without prior authorization, these accounts may be used for payments under exchange and foreign trade arrangements, for importation of goods and services, and for other expenses such as repayment of loan principal and interest in foreign exchange. These funds may also be used for investment operations in hard currencies in Tunisian money markets.

  • Professional books may be opened freely by any exporter, including hotel owners and travel agencies, with the right to transfer 10 percent of their foreign exchange income. These books cover expenses related to the economic activity for which they were opened, especially business travel expenses, without limits specified in the disbursement order and ranging from TD 10,000 to TD 60,000 a year.

Special Accounts

According to a circular issued by the central bank in 1987, residents may open special accounts in convertible dinars or foreign currencies in order to receive revenues accruing to them legitimately from abroad that they are not required to sell to the central bank, provided such revenues are covered by the Exchange and Foreign Trade Law.

Hard Currency Money Market

A hard currency money market was established and organized in 1991 between resident and nonresident banks in Tunisia. Exchanges on this market between authorized intermediaries are made from the above-mentioned accounts in either convertible dinars or foreign currencies.

Trade Regime

Import operations are carried out in conformity with trade agreements between Tunisia and other countries, government procurement plans, and measures taken to free or ban some products. Goods that may be imported are published in the official gazette, with the exception noted below. Any individual or corporation whose job entails the use or sale of imported products and is registered as an importer may import the products in question, subject to the above-mentioned stipulations. Import operations can be classified as follows:

  • Import operations that may be carried out under exchange and foreign trade arrangements. These include mainly goods imported freely by exporting industrial enterprises that are necessary for their production.

  • Liberalized goods that are imported on the basis of import certificates. These goods, announced in the official gazette, may be imported without prior authorization upon submission of an import certificate, valid for six months, with invoices to the authorized intermediary.

  • Banned goods or goods subject to quotas that may be imported on the basis of import licenses. These include all goods not in the published liberalized goods list. The books on these operations are examined by the Ministry of National Economy and are then referred to the central bank for approval.

  • Imports subject to special systems. These imports can be classified either as duty-free imports (authorized by the Ministry of National Economy and approved by the central bank) or as imports subject to an administrative system and to duties.


Products not subject to any bans or restrictions are exported with prior authorization, either without any formal procedure or according to procedures whereby the return of export proceeds to Tunisia is monitored. The following exports are not subject to any formal procedure with respect to foreign exchange and trade arrangements:

  • Exports on a list issued by the Ministry of National Economy.

  • Exports purchased by mail that are not subject to bans or quantitative restrictions and whose costs do not exceed TD 1,800.

Banned goods or those subject to quantitative restrictions may not be exported without an export certificate issued by the Ministry of National Economy and approved by the central bank. The certificate is valid for three months after approval.

Investment Operations

All laws promoting foreign investment in Tunisia guarantee the transfer of foreign exchange capital invested in Tunisia and capital income. This guarantee covers the net revenues and the full proceeds of sales even if they exceed the capital initially invested. Investment laws emphasize the importance of the export sectors and grant them financial and customs incentives and a number of exchange and trade privileges, as follows.

  • Resident individuals and corporations that engage only in export activities subject to Laws No. 51-87 and 100-89 may freely transfer funds to their export activities through authorized intermediaries. They may freely import any goods necessary for their productive operations, provided they are approved by customs authorities.

  • Resident institutions exporting services may provide services for resident institutions within the framework of international tenders or bids.

  • Foreign trading companies may transfer funds related to trade or export through approved intermediaries in conformity with conditions set by the central bank.

In carrying out their activities in the field of foreign trade, exporters may clear their revenues and expenditures in hard currency and may borrow hard currency according to conditions set by the central bank.

Investment by Tunisians Abroad

Investment by Tunisians abroad is subject to the prior authorization of the Central Bank. According to Law No. 110-88, resident foreign trade companies may open liaison offices, affiliates, or branches abroad to promote their activities in exports, intermediation, and foreign trade. These agencies are financed by a percentage of their export proceeds, as specified in Circular No. 26-88 of November 10, 1988, issued by the central bank.

Exchange and Foreign Trade System Since 1993

Following the decision on the convertibility of the Tunisian dinar for current account operations, the authorities reviewed exchange control provisions with the aim of removing the requirements for prior authorization of transfers for current account operations by public and private enterprises and centralized agencies. In this context, Law No. 48-93 of May 3, 1993 was issued, modifying the Exchange and Foreign Trade Law of 1976. Under the revised law, any transfers may be made of payments related to the realized net revenues, proceeds of sales, or invested capital income in convertible currencies.

The central bank now permits authorized intermediaries to make the required transfers for economic transactions, based on the necessary documentation proving the intended expenses. In this context, private sector enterprises are allowed to transfer expenses related to current account operations.

The current convertibility of the Tunisian dinar was accompanied by other measures that (1) raised the travel allowance for residents from TD 200 to TD 500; (2) increased the education allowance for students abroad from TD 500 to TD 1,000 annually, starting in academic year1993–94; and (3) standardized the monthly allowance at TD 600, in any host country, as of January 1, 1993.

To facilitate business travel for entrepreneurs seeking markets or partnerships, the annual business travel allowance was expanded to apply to all institutions, whether importers or nonimporters, in addition to exporters.

With respect to current account operations, maximum allowances were raised, to promote the activities of enterprises and to protect the national economy against capital flight. Importers enjoy an annual allowance ranging between TD 5,000 and TD 30,000, depending on their turnover, and exporters enjoy an annual allowance ranging between TD 10,000 and TD 80,000, also depending on their turnover. New project investors are allowed TD 5,000. For other enterprises, including the self-employed, the allowance ranges between TD 2,000 and TD 20,000, depending on approved turnover.

To boost investment, the revised Exchange and Foreign Trade Law abolished the requirement for prior authorization for actual transfers by nonresidents of realized net income from the investment of foreign capital in convertible currencies in Tunisia.

In addition, the following decisions were made.

  • Tunisians living abroad are now to combine the rights and duties of both residents and nonresidents, so that they may perform any operations related to their money and real properties in Tunisia.

  • The capital required to open branches, agencies, or liaison offices can now be transferred abroad. This change is intended to liberalize Tunisian investment abroad and promote the presence of export enterprises at distribution points in foreign markets.

  • To enable exporters to avoid exchange risks, the portion of balances allowed in professional accounts in convertible currencies was increased from 20 percent to 40 percent of income in those currencies.

  • Banks and enterprises are now able to borrow abroad without prior approval.

Outlook and Future Orientations of Exchange Control Policy

Tunisia’s program of exchange control removal is aimed at enabling enterprises and resident economic transactors to operate in a progressive economic environment that promotes competition and stabilizes the basic balance of payments. In conformity with Article VIII of the IMF’s Articles of Agreement, Tunisia’s decisions—especially those regarding the convertibility of the dinar for current account operations—constitute major steps in this program. Tunisia has now approved full convertibility for foreign investors and Tunisians living abroad, paving the way for the establishment of an exchange market in the near future. Continuing structural reforms and successful economic performances will enable the government to extend the currency’s convertibility to include other operations. The aim is to achieve full convertibility of the dinar in the long term.


Deputy Governor, Central Bank of Tunisia.