Recent Economic Developments

Tunisia showed strong performance owing to its prudent macroeconomic stance, aimed at continued fiscal consolidation and disinflation, backed by a solid record of investment in social and physical infrastructure. The paper describes the government finances, structure of the nonfinancial public sector, and reviews the real, monetary, financial, and external sector developments. The study found that considerable progress was made on the fiscal front, and in implementing tax measures not only to offset the decline in trade taxes but also to tighten expenditure to compensate for the decline in nontax revenue.


Tunisia showed strong performance owing to its prudent macroeconomic stance, aimed at continued fiscal consolidation and disinflation, backed by a solid record of investment in social and physical infrastructure. The paper describes the government finances, structure of the nonfinancial public sector, and reviews the real, monetary, financial, and external sector developments. The study found that considerable progress was made on the fiscal front, and in implementing tax measures not only to offset the decline in trade taxes but also to tighten expenditure to compensate for the decline in nontax revenue.

I. Executive Summary

1. Tunisia’s solid growth performance continued in 1998 (5 percent) despite a contraction of agricultural production. Notwithstanding a rise in the rate of investment, the external current account deficit widened only slightly to 3.4 percent of GDP thanks to a commensurate increase in the saving rate. Inflation decelerated to 3.1 percent despite the increase in administered prices. Due to a hardening of borrowing conditions on international markets, the Tunisians did not tap the markets and reserves declined from 3.1 to 2.6 months of imports at end of 1998. Notwithstanding the strong growth performance, unemployment remained roughly unchanged at 15.6 percent. The outlook for 1999 is for a year of solid growth(6.5 percent) with stable inflation (3.1 percent). The external current account is projected to widen slightly to 3.7 percent.

2. Tunisia’s strong performance in 1998 and into 1999, especially by regional standards has its roots in a prudent and well balanced macroeconomic stance, aimed at continued fiscal consolidation and disinflation, backed by a solid record of investment in social and physical infrastructure. The limited exposure of the economy to short-term capital flows helped Tunisia weather the turmoil in international capital markets. Structural reforms proceeded on several fronts, largely as planned. Notable progress was made toward restoring banking stability under a restructuring program that included the settlement of nonperforming loans to public and semi-public enterprises (5 percent of GDP). The volume of privatization witnessed a marked acceleration with the sale of two large cement factories for a total of US$380 million. Nonetheless, the state still retains extensive control over economic activity.

3. The authorities made a notable effort to increase the transparency of policies, including through the publication of this report, the participation in the IMF pilot project on the transparency of economic policies and the intention to subscribe to the IMF’s SDDS.

4. The authorities’ growth strategy through 2001 while closely tied to the strategic decision to open the economy to foreign competition and to the opportunities offered by global integration, needs to keep pace with the ensuing challenges. The structural widening of the current account deficit requires that fiscal consolidation become front-loaded and the main sources of budgetary rigidity be addressed. In the face of financial innovation, monetary policy would need to expand the range of indicators used to gauge inflationary pressures, and interest rate would have to come to play a more active role in credit allocations. Wage agreements would need to become forward looking, guided by a well-defined official inflation objective. The real exchange rate targeting that has guided exchange rate policy would have to be expanded to take into account a broader set of indicators. Trade liberalization would have to be accelerated and widened on a multilateral basis in order to avoid distortions associated with partial trade liberalization. To increase private sector initiative, the government would have to withdraw from direct intervention in productive activities such as banking, telecommunications, and transport.

II. Introduction

5. During the first two years under the IXth Economic Development Plan (1997-2001), Tunisia’s solid growth performance continued at about 5 percent a year, despite a contraction in agricultural production in 1998. While the services sector made the largest contribution to output growth in 1998, agriculture remains, nevertheless, an important source of employment, and its performance was marked by continued dependence on weather conditions. Gross fixed capital formation, notably in the manufacturing sector, was the most dynamic component of aggregate demand, leading to a marked increase in the investment rate by 3.4 percent of GDP over the period to 27.5 percent of GDP in 1998. Notwithstanding, the external current account deficit widened by about 1 percent of GDP, owing to a commensurate increase in the domestic saving rate on account of a notable rise in government saving.

6. CPI inflation was reduced during the period from 3.8 percent in 1996 to 3.1 percent in 1998, despite the increase in the VAT rates and substantial increases in the prices of public transports and utilities, and in administered prices. Cost pressures due to wage growth, mainly between 5 percent to 8 percent (depending upon the sector) under the 1996-98 tripartite agreement, were offset by sufficient gains in productivity growth. Despite the strong growth performance, the unemployment rate remained at about 15.6 percent and sources of concern for the authorities as young graduates find it increasingly difficult to find work. Social indicators remained far better than those of the region, notably as regards education, health, and the gender gap.

7. Considerable progress was made on the fiscal front. The budgetary objectives pursued in the 1997-98 period were formulated in the context of the IXth Economic Development Plan, which aims at raising gross national saving by about 3.5 percent of GDP over 1997-2001, mainly through a notable increase in government saving. During the first two years of the Plan, the consolidated central government deficit declined from about 5 percent of GDP in 1996 to 2.8 percent in 1998. The authorities were successful in implementing tax measures to offset the anticipated decline in trade taxes (in the face of the implementation of the Association Agreement with the EU) but also managed to tighten expenditure to compensate for the unanticipated decline in nontax revenue. The strong fiscal stance and the increased availability of foreign financing resulted in a gradual shift from domestic to foreign financing. In addition, domestic financing relied more on nonbank financing which led to a steady reduction in the central government indebtedness to the domestic banking system.

8. Over this period, the growth rate of the broad monetary aggregate (M4), remained roughly in line with nominal GDP growth and the authorities’ monetary targets. The Central Bank was able to absorb excess liquidity resulting from the takeover of the banks’ claims on the Cereals and the National Oil boards, thus effectively limiting the expansion of bank credit to the economy.

9. Tunisia’s external current account deficit widened from 2.4 percent of GDP in 1996 to 3.4 percent in 1998. This is largely explained by adverse, but temporary, external price developments, as well as by a surge in imports related to large foreign direct investment. Nevertheless, should the trend continue in 1999, this could put into question Tunisia’s structural competitiveness. The limited exposure of the economy to short-term capital flows helped Tunisia weather the turmoil in international capital markets. Tunisia was successful in tapping the Yankee bond market for the first time in 1997. In 1998, however, faced with a marked hardening of borrowing conditions in international markets, and in light of a significant volume of foreign direct investment (FDI) inflows, the authorities decided to postpone the planned issuance of Eurobonds. International reserves declined from 3.1 months of imports at the end of 1997 to 2.6 months at end of 1998.

10. As of end-1998, Tunisia had a sizable but sustainable external debt amounting to US$11.3 billion (55 percent of GDP as compared to 61 percent a year earlier). Public and publicly guaranteed debt, mostly medium- and long-term debt, accounted for 80 percent of the total. Short-term debt (US$1.6 billion) was mostly contracted by the private sector, with about a quarter in the form of trade credits. More than half of the remaining short-term debt (about US$673 million) consisted mainly of saving by Tunisian expatriates, in anticipation of their return to Tunisia, thus subject to lower risk of massive and rapid withdrawals. Nonetheless, these deposits are yield-sensitive, and the increase over the past years was in part attributable to the relatively attractive interest rates offered on the dinar convertible deposits.

11. Structural reforms proceeded on several fronts but challenges also remain. Notable progress was made toward restoring banking stability under a restructuring program, developed with the support of the World Bank. The main feature of this program included the consolidation and restructuring of bad loans to public enterprises, the strengthening of the regulatory and prudential framework (adoption of the Basle-defined capital adequacy ratio of 8 percent applicable as of December 31, 1999, and reform of the banking law to establish universal banking), and merger of selected government-owned banks. Still, as of end-1998, the ratio of nonperforming loans to the private sector to GDP stood at 22 percent of GDP.

12. The industrial restructuring (mise à niveau) programs were launched in 1996 to prepare private manufacturing enterprises for the challenge posed by trade liberalization with Europe; these programs have yielded some positive results in terms of improved export performance and job creation. Total investment of about TD 1 billion (US$930 million) was generated over three years toward upgrading productive capacity and human capital, supported by grants totaling TD 135 million. Notwithstanding, the product specialization and the geographical concentration of exports, and increasing competition in the export markets pose a major challenge.

13. Privatization accelerated in 1998, with the sale of two large cement factories to foreign investors for a total of TD 418 million (US$380 million). State-owned enterprises however still accounted for about 20 percent of value added in 1998. The government continued to withdraw from the productive sectors with the granting of the first concession for the private production of electricity as well as the opening of certain port handling activities to private competition. To attract foreign investment in sectors other than energy, a major upgrade of infrastructure and services is required. This would be achieved through a broadening of privatization efforts to include larger public sector companies, in particular the banking, telecommunications, and transport sectors.

III. Real Sector Developments

A. Overall Developments

14. Over the 1997-98 period, real GDP grew on average by more than 5 percent per year (Table 1). With a population growth estimated at about 1.4 percent per year, this implied an annual growth in per capita income of 3.8 percent, higher than the rates prevailing in many developing countries.1

15. Despite a contraction of agricultural production (-1 percent), real GDP grew by 5 percent in 1998. The services sector contributed to about half of the increase in output growth in 1998 (2.4 percent), followed by the manufacturing sector, which contributed about 1 percent. Notwithstanding the agriculture sector remains an important source of employment and its performance remains dependent upon weather conditions, especially in the rain-fed areas.

16. Gross fixed capital formation, notably in Tunisia’s traditional and new export sectors (textile and leather products, mechanical and electrical goods, and food processing) was the most dynamic components of aggregate demand. Notwithstanding the marked increase in the investment rate to 27.5 percent of GDP, the external current account deficit widened only slightly to 3.4 percent thanks to a commensurate increase in the saving rate.

17. CPI inflation was reduced from 3.7 percent in 1997 to 3.1 percent, despite the increase in the VAT rates and substantial increases in the prices of public transport and utilities, and in administered prices.

18. Despite strong growth performance, the unemployment rate has remained roughly unchanged at 15.6 percent. This high level reflects in part the inclusion of nonactive job seekers in the official definition. Outside of this group, unemployment has been largely concentrated among first time job seekers and unskilled workers.

B. Aggregate Demand and Saving

19. The strong growth performance in 1997-98, was spurred by continued robust expansion in aggregate demand, including in private investment. Over the period, private sector consumption growth,2 rose from less than 3 percent in 1996 to more than 5 percent in 1998, owing mainly to higher levels of income. Growth in public consumption decelerated from 10 percent in 1997, to about 7 percent and 4 percent in 1997 and 1998, respectively, reflecting the containment of budgetary expenditures (Table 4).

20. An important factor underlying the sustained growth in aggregate demand was a strong recovery in investment, which rose by 10 percent in 1997, and 6 percent in 1998. Private investment rose sharply with the implementation of the mise à niveau programs, aimed at upgrading the industrial sector. In support of these programs, public sector projects concentrated on infrastructure, including electricity, road projects and communications (Table 5).

21. The increase in the investment rate from 25 percent of GDP in 1996 to 27.5 percent of GDP in 1998, was financed mainly through an increase in gross national saving (about1.7 percent of GDP over the period), on account of a sharp improvement in government saving (2.1 percent of GDP over the period), thus limiting the widening of the current account deficit to 0.8 percent of GDP.

C. Sectoral Developments

22. Although the share of agriculture and fishing in total output has declined from about 17 percent in 1992 to 13 percent in 1998, agriculture remains an important source of employment. Its performance was marked by the heavy dependence on weather conditions, especially in the rained areas. Moreover, this volatility affects the nonagricultural sector via supply links (mostly with agro-processing) and demand effects on local industry and many services.

23. However, as the Tunisian economy became more diversified, it also became more resilient to shocks. For example, in 1986 agricultural output contracted by about 20 percent as a result of the drought, with the overall economic activity declining by 2 percent.3 By contrast, during the 1994–95 drought, while agricultural output declined cumulatively by 19 percent, the economy still managed to grow on the average at about 2.8 percent per year, owing to an expansion in manufacturing and services sectors.

24. The share of manufacturing value added in total GDP stood at 18 percent in 1998, unchanged since 1996, while that of services rose from 45 percent to 46 percent, owing mainly to the contributions of transport and telecommunications sectors. The share of tourism in total GDP remained virtually stable at about 6 percent.

Agriculture and fishing

25. Tunisia’s main agricultural products include cereals (hard and soft wheat and barley), olives,4 citrus fruits, and vegetables. While agricultural output growth had rebounded in 1996, following two years of drought, it slowed down markedly in 1997 to 3 percent (Table 1). This reflected inter alia a sharp drop in the production of cereals (60 percent) as a result of poor rainfalls mitigated by a record output of olives (1,550 thousand tons in 1997 as compared to 300 thousand tons in 1996). In 1998, despite a turnaround in the production of cereals (59 percent in 1998) agricultural value added declined by 1 percent mainly on account of a sharp drop in the output of olives to more normal levels (450 thousand tons; Tables 6 and 7).

26. The Tunisian authorities have recently introduced several measures to boost agricultural production, particularly farming, in anticipation of negotiations with the European Union in January 2000 on the extension of free trade to the agricultural sector and a new round of talks on agriculture with the World Trade Organization (WTO). These measures are comparable to the mise à niveau programs of modernization in the industrial sector (below). The authorities have decided to waive all outstanding loans to fanners prior to 1998 up to a ceiling of TD 2,000. The move is intended to benefit around 120,000 small farmers, or about three-quarters of the indebted farmers. Outstanding loans ranging between TD 2,000 and TD 40,000 are to be rescheduled over a period of up to 7 years; this will cover about 44,000 farmers. The authorities are also accelerating the implementation of a plan to establish agricultural training centers in every province by 2001. To encourage organic farming, technical support centers will be established to extend to farmers grants covering up to 30 percent of the cost of equipment. The agricultural investment agency, Agence de promotion des investissements agricoles, has also made available about 6,686 hectares of state farmland in the Nabeul province for leasing to export-oriented companies.

Energy and water

27. Value added in the energy sector (including hydrocarbons, electricity, and water) declined throughout the 1992-95 period mainly as a result of the continued drop in crude oil production, which constituted between 70-80 percent of the sector’s value added (Table 1). In the 1996-98 period however, value added in the sector rose by an average of 4 percent a year, thanks to a pick up in the production of gas with the start of the activity of the Miskar gas field in 1996, and an increase in the output of crude oil in 1998 (Table 8).

28. In 1992-97, output of crude oil continued to dwindle on account of a gradual exhaustion of reserves in the main fields. Output of the most productive field El Borma, which accounts for over 30 percent of total output declined by 12 percent in 1997. The output of Ashtart field, the second most productive, declined by about 4.8 percent in the same year. In 1998, however, the coming on stream of small fields producing more than 240 thousand metric tons,5 reversed past trend, allowing total output in the sector to rise by about 3 percent.

29. With the start of exploration at the Miskar6 and Zini gas fields in 1996 and the full operation of the second transcontinental gas pipeline, gas production rose from 126 thousands metric tons in 1995 to 1,720 thousands metric tons in 1998.

30. Electricity production (mainly by the Tunisian Electricity and Gas Company (STEG)) generated almost exclusively by thermal plants based on fuel-oil and natural gas rose by about 8 percent a year in 1997-98 (Table 8), reflecting an increase in consumption of high voltage (tension) electricity by the industrial sector (about 6 percent a year on average) and of low voltage (tension) by households (more than 8 percent a year on average).

31. According to the Ministry of Agriculture, about 70 percent of the objectives set under the 10-year national water plan (1990-2000) have been achieved, including the construction of 6 large dams, 547 reservoirs, and 57 wastewater treatment plants. This allowed the mobilization of an additional 973m cu meters of water per year, bringing total available water resources to some 78 percent of total exploitable resources. About 80 percent of water resources are used for irrigation. Value added growth in this sector rose from less than 3 percent in 1996 to more than 5 percent a year on average over 1997-98.


32. The mining sector, which includes lime phosphate, iron ore, and sea salt, contributed about 1 percent to total output, but together with phosphate derivatives industries, accounted for about 10 percent of Tunisia’s foreign exchange earnings. In 1997 the Bourgine mine was closed temporarily (affecting the production of ores), resulting in a decline in output by more than 9 percent. In 1998, a pick up in the production of phosphate and the reopening of the Bourgine mine brought about a rise in value added by about 26 percent.

Manufacturing industries

33. The manufacturing sector in Tunisia is relatively diversified. It consists of textiles, clothing and leather goods; food processing (especially cereal derivatives, meat and olive oil); construction materials and glass; mechanical and electrical goods; chemical and rubber; and woodwork and paper. This sector which is mostly export-oriented accounted for about 18 percent of GDP in 1997-98.

34. In 1997, value added in manufacturing rose by about 7 percent reflecting an acceleration of activity across all industries, in particular, a surge in output of food industry (19 percent) mainly on account of olive oil, mechanical and electrical (7 percent), and textile and clothing (5 percent) mainly due to increased demand in partner countries. Activity in the manufacturing sector slowed down to about 4 percent in 1998 owing to a decline in output of the food processing industry (5 percent). Output in other manufacturing subsectors grew by about 6 percent in 1998 as compared to about 4.6 percent in the previous year, reflecting strong growth in the textile, mechanical, chemical, and woodwork and paper industries.

35. With the signing of the Association Agreement in 1995, the authorities launched a vast program of Industrial modernization (mise à niveau) aimed at helping enterprises meet the competitive challenge of free trade with Europe. This program is directed at upgrading the capital stock but also at organization methods and practices, as well as managerial skills. The program targets to restructure about 2,000 enterprises by the end of 2001. A recent periodic review of the program concluded that between March 1996 and March 1999, 462 restructuring plans were approved by the Comité de pilotage du fonds de developpement de la compétitivité industrielle (COPIL), of which 38 percent in the textile sector, 14 percent in leather and shoes, and 13 percent in agro-industry. Total investment effected under the program amounted to TD 998 million, of which about TD 138 million was directed toward investment in human capital. A recent survey of 202 enterprises revealed that over the three-year period (1996-99), participating enterprises generated an increase of about 19 percent in employment, 32 percent in sales and 46 percent in exports. The implementation rate of investment projects was about 50 percent.

Construction and public works

36. A pick up in housing construction and public works led to an acceleration in value added growth from less than 3 percent in 1996 to about 7 percent on average in 1997-98.


37. The main activities in services include domestic trade; transport and telecommunications; and tourism. Excluding government wages and salaries, services continued to account for a third of GDP in 1997-98. Activity growth in the sector picked up significantly in 1997-98 averaging about 6.5 percent a year, from less than 3 percent in 1996.


38. Activity in domestic trade, which accounted for about 18 percent of total output in 1997-98, was stimulated by two policy initiatives: (i) the implementation of the Association Agreement with the EU; and (ii) in 1997 export-oriented firms were allowed to sell 20 percent of their output on the domestic market. Value added growth in this sector rose steadily from 4 percent in 1996 to 5 percent and 7 percent in 1997 and 1998, respectively.

Transport and telecommunications

39. Value added in transport and telecommunications rose on average by about 6 percent in 1997-98. This reflected rising maritime and air traffic owing respectively to larger trade activities and tourist arrivals, and extension of telephone lines by Telecom Tunisia.

40. Notwithstanding the rapid development of private carriers, the transportation sector is still dominated by public companies, including in passenger and maritime transport and accounted for about 6 percent of total output in 1997-98. In 1997 several reform measures were introduced: the sector of road merchandise transport was passed on entirely to private operators; two new maritime transport companies, Gaz Marine and the Compagnie Generate Maritime (COGEMA) were created; certain port handling activities were also opened up to private competition; and a new private air transport company, Mediterranean Air Service (MAS), specializing in airfreight was created. The program to modernize airport infrastructure continued in 1997-98 with the extension of the Tunis-Carthage international airport. Investment in this sector picked up with the purchase of new boats by the Compagnie Tunisienne de Navigation (CTN) in 1997 and the purchase of two airplanes by Tunisair in 1998.

41. Telecommunications are the weakest point in Tunisia’s infrastructure. International communications are expensive, availability of high-speed data transmission is limited and there are controls on mobile telephones and the internet. In addition, telephone density is low, at about 6 telephones per 100 inhabitants. In early 1996, the authorities shifted responsibility for the network from the communications ministry to a new public company, the office of Tunisie Telecom, to increase efficiency and speed up the installation of 880,000 new lines. Work also began on building a Global System for Mobile Communications (GSM) cellular phone network for about 200,000 subscribers.


42. The tourism sector accounted for about 5 percent of GDP in 1997-98. Tunisia has focused traditionally on low value-added mass beach tourism. In an effort to increase the value added in the sector and enhance its market share in Mediterranean tourism (currently estimated at less than 2 percent), the Tunisian authorities have been exploring the potential for expanding cultural and Saharan tourism. Tourism is very much dependent on the German and the French markets, which accounted for about 35 percent of foreign visitors in 1997-98. Over the period, tourism receipts in terms of Tunisian dinars increased by 25 percent due mostly to the increase in the entries of nonresidents (21 percent) and reflecting a modest increase in average daily expenditure per tourist (about 5 percent). Average occupancy rate rose from 49 percent in 1996 to 52 percent over the period under review as hotel capacity was constrained by a marked reduction in investment in the sector.

D. Prices, Wages and Employment


43. Inflation as measured by the average increase in the consumer price index decelerated marginally to 3.7 percent in 1997 from 3.8 percent in 1996, notwithstanding increases in prices of energy and subsidized food products in mid-year (Table 10). This was mainly attributable to a deceleration in the average increase of the price of clothing from 6.4 percent in 1996 to 3.7 percent in 1997, and in the price of housing, from 3.0 percent to 2.3 percent in 1997. Inflation decelerated further in 1998 to 3.1 percent on average, despite continued increases in prices of energy and subsidized food products (5.2 percent at end-1998), and in the prices of public transport and utilities owing mainly to a deceleration of prices of nonsubsidized food products (1.1 percent at end-1998).

44. Administered prices rose by 4.7 percent in 1997 and by about 3.6 percent in 1998 (as compared to 3.0 percent in 1996), reflecting the increase in prices of subsidized foodstuff (such as cereals and cereal products, edible oils, sugar, and milk) in both years. At the same time, nonadministered prices decelerated from 4.1 percent in 1996, to 3.2 percent and 2.3 percent in 1997 and 1998, respectively. With the deceleration of the price of these commodities, which cover about two-thirds of the CPI basket, the increase in the general index decelerated [slowed down] from about 3.8 percent in 1996 to 3.6 percent and 3.1 percent in 1997 and 1998, respectively.


45. Overall food subsidies provided through the food subsidy fund (Caisse générale de compensation (CGQ) have generally declined from 2.2 percent of GDP in 1996 to 1.7 percent in 1998, reflecting the phasing out of consumer and input subsidies on a wide range of products over the period as well as a decline in the price of imported goods. Consumer subsidies remain on certain basic food staples (cereals and cereal products, edible oils, sugar, and milk) and on schoolbooks. Efforts have been made to improve the targeting of subsidies by limiting them to the products that are predominantly consumed by the poor. Moreover, starting in 1996, in the context of the rationalization of outlays of the food subsidy fund and the elimination of arrears accumulated by the Cereal and Oil Boards, prices of subsidized food products have been raised annually (above) to contain outlays. And, since 1996, most of the operations have been handled directly by the Ministry of Commerce.7 At the same time, direct transfers in cash and in kind to needy families, elderly, handicapped, and school children were also raised.

Wages and salaries

46. Since 1993, wage increases at the sectoral level have been set every three years in the context of the tripartite wage negotiations, including the public sector and major private enterprises, with the government playing a facilitating role. The last agreement covered the 1996-98 period and provided for wage increases, mainly between 5-8 percent, depending on the sector. These increases were accompanied by sufficient productivity growth to allow inflation to decline to about 3 percent.

47. A feature of Tunisia’s labor market is the strict enforcement of minimum wage laws. The government sets minimum hourly wages for the non-agricultural sector (SMIG)8 and minimum daily wages for workers in agriculture (SMAG).9 The SMIG and the SMAG have been raised regularly in line with the annual increases in administered food prices. Two increases were granted in 1997, taking both the SMIG and the SMAG 5.0 percent higher than a year earlier, as administered food prices rose by 6.4 percent as at end-1997. The SMIG and the SMAG were raised respectively by 2.0 percent and 1.5 percent in 1998, as administered food prices rose by 5.2 percent as at end-1998.


48. Regular employment surveys were conducted until recently in the context of a census or a comprehensive living standards survey, conducted every five years, with the most recent in 1994. A more limited survey was conducted in 1997 which places the labor force at about 2.9 million in 1997,10 and unemployment rate at about 15.6 percent. While unemployment in Tunisia is the lowest in North Africa, it remains high and a major source of concern as young graduates find it increasingly difficult to find work. Although the problem mainly affects new arrivals on the labor market, job losses are beginning to emerge as a cause of unemployment. The authorities have adopted measures to overcome the skills and information shortage that drives a wedge between job supply and demand. An innovative computerized system has been introduced to match job seekers and job offers, and is made available to the public through the intranet. The Tunisian Solidarity Bank (Banque tunisienne de solidarité (BTS) which was created in 1998, has been specializing in financing micro-projects and offering loans on flexible terms including credit to young graduates, allowing the creation of an estimated 11,000 jobs. The National Solidarity Fund (Fonds de solidarité nationale (FSN)) has contributed to the creation of about 40,000 jobs since its inception, in 1992.

IV. Government Finance

A. Structure of the Nonfinancial Public Sector

49. The Central Government consists of the Presidency, the National Assembly, the Prime minister’s òffice, 25 ministries and State Secretaries. In addition, there are various central government units with their own budget comprising the social security funds and a number of local administrative11 and economic12 agencies. Local governments include 21 councils of governorships and 257 municipalities.

50. In this report, the consolidated financial operations of the Central Government refer to the operations of the Treasury, including extrabudgetary operations directly financed from abroad, and the operations of the social security funds.13 The Treasury accounts include the current and capital budgets (Titre I et Titre II), the special funds (fonds spéciaux), the joint funds (fonds de concours),the Treasury’s net lending operations, including on lending related to foreign resources (paiements directs).

51. Tunisia’s budget year coincides with the calendar year. Revenues are recorded on a cash basis while expenditure is on a payment order basis.

B. Overview of Budgetary Trends, 1997–99

52. The budgetary objectives followed over the 1997–99 period were formulated in the context of the IXth Economic Development Plan, which aims at consolidating macroeconomic stability while enhancing private sector led growth and reducing unemployment. The medium- term macroeconomic framework under the IXth Economic Development Plan aims at raising gross national saving by about 3.5 percent of GDP during 1997-2001 on account of an increase in consolidated central government saving rate from 2.4 percent of GDP in 1996 t0 6 percent in 2001. To this end, the authorities’ objective is to pursue a prudent fiscal stance and reduce the overall consolidated central government deficit14 (excluding grants and privatization receipts) from about 5 percent of GDP in 1996 to 1.5 percent in 2001, through: (i) the stabilization of total revenue in the face of declining trade tariffs;15 and (ii) the reduction of expenditures mainly in the context of the rationalization of current spending, including the food subsidy reform. Expenditure in basic infrastructure and social sectors are to continue in line with the development objectives of the Plan.

53. During the 1997-98 period, the overall deficit of the consolidated central government declined in line with the Plan targets from about 5 percent of GDP in 1996 to 4.2 percent in 1997 and to 2.8 percent in 1998. Over the period, the decline in total revenue to GDP ratio (1.3 percent of GDP), mainly on account of a shortfall in nontax revenue, was more than compensated by a drop in total expenditure (3.7 percent of GDP). The authorities were successful in implementing tax measures to offset the decline in trade taxes but also managed to tighten expenditure to compensate for the unanticipated decline in nontax revenue. In 1997, expenditure was cut through increases in administered food prices and a tight recruitment policy, coupled with a pruning of low priority investment expenditure in mid-year to compensate for unanticipated higher world food prices. In 1998, further streamlining of expenditures took place.

54. The overall deficit of the consolidated central government is projected to further decline to 2.6 percent of GDP in 1999, in line with the objectives set under the Plan. With no new tax measures foreseen under the 1999 Budget Law, the share of total revenue in the GDP is projected to decline by about 0.5 percentage point on account of lower tax as well as nontax revenue. The projected improvement in the overall deficit of the consolidated central government relies entirely on a tightening of expenditures (about 0.7 percent of GDP), mainly through the streamlining of expenditures on goods and services, and subsidies.16

C. Revenue Developments

55. In 1997, the revenue of the consolidated central government fell from an average of 30 percent of GDP prevailing in the preceding three years, to 28 percent of GDP, reflecting a sharp decline in nontax revenue. Notwithstanding the continued decline in nontax revenue, total revenue rose to 29 percent of GDP in 1999 thanks to a sharp increase in tax revenue.

56. Tax revenue (excluding social security) rose from an average of about 20 percent of GDP in 1994–96 to 21 percent in 1998 owing to a combined increase (equivalent 2 percentage points of GDP) in income taxes and VAT receipts, more than compensating the decline in trade taxes (equivalent to 1 percent of GDP). This reflected the impact of revenue measures implemented during the period: (i) an increase in the main VAT rate from 16 percent to 17 percent in 1997 and ultimately to 18 percent in 1998; (ii) an increase of the 10 percent VAT rate on some energy products to 17 percent, and of the 6 percent VAT rate to 10 percent in 1997 on other products, and finally the harmonization of the VAT rate on these products at 18 percent in 1998; (iii) an increase in the minimum tax on income and profit in 1997; (iv) important tax collection measures including in particular the implementation of a 50 percent withholding on VAT on all transactions effected with the state and state-owned enterprises in 1998; and (v) the full year impact in 1997 of the extension of the VAT to retail trade (Box 1). Social security contributions remained stable at about 5 percent of GDP throughout the period.

57. Trade taxes declined from an average of 5 percent of GDP in the two years prior to the implementation of the Association Agreement with the EU (1994–95) to 4.1 percent in 1996, and to 3.5 percent and 3.4 percent of GDP in 1997 and 1998, respectively.

58. In Tunisia, nontax revenue of the central government (excluding social security) is comprised of four major categories: (i) transfers of profits and dividends by petroleum companies; (ii) earnings of state-owned industrial and commercial establishments; (iii) gas royalties and licenses; and (iv) central bank profits. Nontax revenue declined from about 4.5 percent of GDP in 1996 to about 3 percent of GDP a year in 1997-98, mainly on account of a decline (equivalent to about 1 percent of GDP) in the transfer of profits and dividends by the publicly-owned petroleum companies, as a result of lower production of crude in both years, as well as an increase in the price of imported petroleum products in 1997 which was largely due to the depreciation of the dinar vis-à-vis the U.S. dollar.17 Transfer of profits by the central bank declined by about 0.3 percent of GDP, reflecting the cost of taking over the loans of BNA to the offices (see footnote 20).

D. Expenditure Trends

59. The Tunisian authorities have successfully tightened central government spending in recent years, with the ratio of expenditures of the consolidated central government declining from 35.5 percent of GDP in 1996 to less than 32 percent in 1998. This reduction affected both current expenditures (which fell by 3.3 percent of GDP over the period) and capital expenditure and transfers, including net lending (which dropped by 0.4 percent of GDP). The decline in current expenditure reflected a combination of lower interest payments, lower spending on goods and services, and a steady decline in food subsidies. The decline in capital expenditure and net lending resulted from the postponement of investment outlays starting in mid-1997.

60. The wage bill was contained at around 11 percent of GDP in 1997-98,18 as net recruitment (excluding the military and the police) was limited to 7,000 per year.19 Wage increases in the public sector were granted in line with the tripartite agreement (1996-98) and provided for an average increase of about 5 percent per year.

61. Outlays on goods and services declined by about 0.6 percent of GDP over 1996-98 owing mainly to a streamlining of budgetary outlays outside the social sectors and the military and police.

62. Interest payments on public debt, which had averaged about 4 percent of GDP in 1994–96, declined steadily to 3 percent of GDP in 1998. This reflected mostly lower interest payments on domestic debt in line with the decline in treasury-bill rates.

63. Outlays on transfers and subsidies declined by about 2 percent of GDP over the 1997-98 period. As indicated in footnote 18, a reclassification of transfers on account of wages and goods and services explains half of the decline. After the consolidation and the clearance of arrears of the food subsidy fund (Caisse générate de compensation (CGC))in 1996,20 consumer subsidies declined steadily by about 0.5 percent of GDP over the period under review, owing to annual increases in the prices of subsidized products and lower import prices. The decline in transfers to the public social security fund (about 0.3 percent of GDP) during the period reflected lower outlays on pensions.

64. Capital expenditures declined from about 7 percent of GDP in 1996 to about 6.5 percent of GDP per year in 1997-98, the level prevalent in 1995. In line with the targets set under the IXth Economic Development Plan, investment throughout this period was concentrated on projects in the agricultural, housing, education, and health sectors and in infrastructures. In mid-1997, in response to a substantial shortfall in revenue from the budgeted level, the Tunisian authorities implemented measures which included a pruning of capital outlays in an amount equivalent to 0.5 percent of GDP.

E. Financing

65. A prudent fiscal stance and the increasing availability of foreign financing have allowed a gradual shift from domestic to foreign financing. In addition, domestic financing has increasingly relied on nonbank financing which has led to a steady reduction in the central government indebtedness to the domestic banking system.21 In 1997, while privatization revenues were modest, the Tunisian authorities successfully tapped the Yankee bond market with two issues totaling US$400 million, thus maintaining the share of net foreign financing in total at about 60 percent. In 1998, substantial privatization receipts (equivalent to 1.8 percent of GDP) allowed the authorities to avoid borrowing on international capital markets at unfavorable terms, leaving net foreign financing at zero and the overall deficit after privatization receipts and grants (0.6 percent of GDP) financed entirely by nonbank borrowing.

Main Revenue Measures Aimed at Compensating for the Decline in Trade Taxes

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Source: Ministry of Finance; Direction generate des etudes et de la legislation fiscale.

For more details see “Tunisie; Accord avec l’Union européenne et strategic de réformes fiscales, avril 1996”,IMF, Fiscal Affairs Department


In the mid-1980s, the public sector represented 40 percent of total investment and accounted for about 30 percent of total value added and 33 percent of total official employment Public enterprises were experiencing mounting losses and had accumulated a debt burden of approximately TD 3 billion, or 35 percent of GDP.

In 1987, with World Bank-support, the government undertook to reduce the weight of the public sector in commercial activities by restructuring and privatizing small-and medium-sized public enterprises, mainly in the textile, tourism, and construction sectors. The program was modest, leading to the privatization of 48 small-scale enterprises over 1987-94, generating about US$80 million in sales proceeds. By the end of the program there remained about 232 public enterprises or entities.

A second and more ambitious privatization program was launched in 1996, with the support of a World Bank Economic Competitiveness Adjustment Loan (ECAL), targeting 63 public enterprises for privatization or liquidation, with an estimated total net asset value of US$1.4 billion. Between 1995-97, 45 enterprises were privatized, but the enterprises involved were relatively small and sale proceeds amounted to only US$200 million. With the privatization of two cement companies in 1998, cumulative privatization revenue for 1995-98 almost tripled to US$570 million.

In the context of the settlement of nonperforming loans to 49 public enterprises, supported by the ECAL II of 1999,24 enterprises are to be liquidated while 4 enterprises, deemed strategic (with a combined asset book value of TD 168 million) will continue to operate as public enterprises. The program also envisages complete and partial divestitures of the government from the remaining 20 enterprises. This will mark the complete withdrawal of the public sector from the construction, housing, and electrical supply sectors.

In recent years, large public enterprises such as the national airline, Tunisair, and the insurance company (Star) have also sold shares on the Tunis stock exchange. Nine other public enterprises are scheduled to sell shares on the stock market over the next year. Still many large enterprises in the sectors considered strategic (banking, telecommunication, mining, agro-industrial, and maritime and air transport) remain outside the realm of the current privatization program. The share of public enterprises in GDP was estimated at 22.5 percent over the 1992-95 period, and is unlikely to have declined below 20 percent since then.

In addition to sales of public assets, the authorities are promoting private sector participation in infrastructure through BOO/ BOT (build-operate-own or -transfer) contracts. The first BOO contract was signed recently with an American-Japanese consortium for the construction and operation of a 470 megawatt power plant in Rades. Further private participation is being sought in the electricity sector, highway construction, and water treatment and waste disposal.

Tax Reform

Starting in 1987, as part of the adjustment process initiated with the assistance of the Fund, Tunisia embarked on a major reform of its tax system. During 1995-96, the Fund made several recommendations aimed at consolidating progress made in fiscal reform since 1987, further rationalizing and modernizing the fiscal system, and responding to revenue losses emanating from the Association Agreement with the European Union (AAEU). The authorities have been successful at broadening the tax base, rationalizing the tax and tariff structure, and taking compensatory measures to compensate for the shortfall in customs revenues. However, several distortions remain, resulting from various exemptions, in particular regarding import duties and suspension regimes under the VAT system extended to certain priority sectors, which were generalized under the Investment Code enacted in 1993.


In the early 1980s, Tunisia’s tax system was distortionary, complicated and difficult to administer. The direct income tax system was scheduler, with the main taxes levied on profits from commercial or professional activities, wages, dividends, and interest income. A solidarity tax was also added to these taxes. In addition, a general income tax, with marginal rates on personal income ranging from 10 percent to 80 percent was levied on the total personal income of all income earners. Indirect taxes consisted of three turnover taxes on production, consumption, and services together with a series of excise duties. Many transactions were subject to both production and consumption taxes, which resulted in 16 different effective tax rates, ranging from 6.4 percent to 45.9 percent For each category of turnover tax, different exemptions and deduction rules applied. In general, there was no deductibility among the three taxes. Customs duties, which constituted an important source of revenue, ranged from 5 percent to 236 percent, with an exemption for imports of raw materials and semi-finished goods used by local industries.

Tax reform

The most significant measures introduced under the 1987 tax reform, were the adoption of a value-added tax (VAT) and the introduction of a single personal income tax and of a new simplified corporate tax. Three turnover taxes and an excise tax were effectively unified under the VAT in July 1988. The VAT tax included three rates: (i) a standard rate of 17 percent on most goods and services; (ii) a reduced rate of 6 percent applicable to basic consumer goods and services; and (iii) a high rate of 29 percent, applicable to luxury goods. Over the 1991-97 period, steps were taken to streamline the VAT. Its coverage was broadened (including to retailers in 1996) and a large range of products was moved from the high rate of 29 percent to the "normal rate" of 17 percent, all as recommended by FAD. By the end of 1997, the normal rate covered about 83 percent of total VAT receipts. In 1998, the normal rate was raised to 18 percent, the VAT rate on energy products was unified with the normal rate, and additional products were moved from the 29 percent rate to the normal rate.

The authorities also embarked on a comprehensive reform of direct taxes by introducing a new tax code, effective January 1990. The existing schedular, general income and solidarity taxes were abolished and replaced by a single personal income tax. The number of income brackets was reduced from 18 to 6, and the tax rates limited to the 15-35 percent range. The existing corporate tax, characterized by 6 rates (differentiated according to economic sectors, with a top rate of 44 percent) was replaced by two rates, a standard 35 percent rate and a special rate of 10 percent applicable to cooperatives and to enterprises in the crafts, agriculture, and fishing sectors. At the same time, tax withholding was extended to payments of interests, professional fees, and commissions and rentals paid by the public authorities and corporations. Over 1990-96, provisions were introduced aimed at reinforcing the global nature of the income tax through greater harmonization of the taxation of different sources of income, including between the personal income and corporate profits. All investment income, other than dividends, was made subject to the same taxation. Tax withholdings at the source were extended to income from noncommercial activities. Various lump-sum tax regimes were simplified and harmonized.

Meanwhile, the tax administration was strengthened significantly through improvements in tax assessment and collection procedures and the reinforcement of tax auditing procedures.

In an initial phase (1986-88), tariff reform included (i) the merging of tariff schedules; (ii) the narrowing of tariffs from a maximum of 236 percent to 43 percent in 1988; and (iii) the reduction of quantitative restrictions. Notwithstanding the lowering of tariffs, protection for locally produced goods was largely maintained. The gradual reduction of quantitative restrictions beginning in 1991 was accompanied by the introduction of transitional compensating duties (droits compensatoires provisoires or DCP) on finished and semi-finished goods, ranging from 10 percent to 30 percent that were phased out by 1998. As at end-1998, in line with the AAEU, all import duties on all products, included in group I, were eliminated, and the elimination of duties applicable to the remaining lists was implemented, ahead of schedule. Moreover, tariffs on imports of equipment goods, except for those competing with domestic goods were eliminated on a multilateral basis.

In 1996, the FAD mission estimated that cumulative loss in revenue arising from the trade liberalization under AAEU (including the phase out of DCPs) would rise from 0.3 percent of GDP in 1996 to about 1 percent in 1998 and further to 2.6 percent of GDP by 2008, when the agreement will be fully implemented. In 1996-98, the decline in tariff revenue (including the phase out of DCPs) was offset mainly through the increase in the main VAT rate to 18 percent and the extension of the main rate to energy products. However, no steps were taken to review and phase out exemption regimes as envisaged by FAD.

V. Monetay and Financial Sector Developments

A. Overview

66. Tunisia has pursued financial sector reforms since the late 1980s. These reforms involved the introduction of indirect monetary policy instruments (notably repo auctions in the interbank money market), the modernization of the legal and institutional structure of the financial system, and the adoption of internationally accepted methods of supervision and prudential regulation. Furthermore, direct credit controls were phased out; interest rates were gradually liberalized; mandatory lending and preferential refinancing rates were eliminated; management of the stock exchange market was privatized and modernized; the legal framework for new operators such as merchant banks, leasing companies, and mutual funds was set up; an interbank foreign exchange market was established, and the supervisory role of the central bank was strengthened.

67. The most recent measures have emphasized structural reforms of the banking sector and of the money and foreign exchange markets. However, progress remains to be made toward a more market-based monetary policy and the restructuring and privatization of key banks.

B. Institutional Structure of the Financial System22

68. In mid-1999, the Tunisian banking system was composed of the central bank (Banque centrale de Tunisie (BCT)); thirteen deposit money banks (of which 6 are government- owned,23/24), 8 development banks (of which 2 are government-owned and 6 are joint ventures between Tunisia and other Arab states), 8 private leasing companies, and 1 saving institution. Commercial banks are allowed to collect deposits of any maturity, provide short- and medium-term credit, and may engage in long-term credit operations for up to 3 percent of their deposit base. The mission of the development banks is to finance investment projects through medium- and long-term credit and through equity participation. They face high funding costs since they rely on borrowed funds, most of which are provided by bilateral and multilateral agencies (international borrowing). Other financial institutions include: 2 merchant banks, 25 8 offshore banks, 26 2 factoring companies, 20 mutual funds, 19 capital risk companies, 16 insurance companies; and the stock exchange, brokerage houses, and the central depository for securities (STICODEVAM).

69. Not withstanding the gradual development of other financial institutions such as the stock market, mutual funds and leasing companies, the intermediation of saving and the financing of economic activity in Tunisia remain dominated by the banking system. In addition, banks are majority owners of most leasing companies, of the bulk of mutual funds capital, and they represent around 60 percent of the stock market capitalization.

C. Instruments of Monetary Policy

70. The introduction of indirect monetary policy instruments has had a significant impact on the conduct of monetary policy. With the elimination of direct credit controls, the BCT’s interventions in the money market have become the main monetary policy instrument. However, the transition to indirect instruments of monetary policy has not yet been completed and a number of nonmarket-based practices have been maintained.

71. The framework for the use of monetary policy instruments has improved over the years, most notably through the elimination, in 1996, of the preferential rediscount window and the abolition of mandatory lending requirements to priority sectors and the government. The weekly liquidity auctions are used as the BCT’s main monetary policy instrument for liquidity injections. The seven-day reverse repurchase operations facility serves as a daily refinancing window, at the initiative of banks. The interest rate on the seven-day reverse repurchase operations is set by the BCT at the auction rate plus a margin (1 percentage point since 1992). As access to this facility is automatic, the rate on the seven-day reverse repurchase operations establishes an upper limit for the money market rate. The main monetary policy instrument used by the BCT to drain liquidity, when needed, is the weekly bid for liquidity procedure. The end-of-day settlement operations are used to either accommodate short-term (overnight) liquidity shortfalls of certain banks or to mop up the residual amounts of overnight liquidity. Currently, the rate of these operations is the same as the auction rate.

The Instruments of Monetary Policy

Weekly liquidity auctions (appels d’offres): the central bank invites bids for its weekly auction, with a maturity of seven days but does not specify the amount of the tender; it decides the amount to be injected and the bids are all satisfied at the same official intervention interest rate, in proportion to the quantity demanded. Collateral required is good claims on priority sectors (priority sectors are specified each week by the BCT).

Seven-day reverse repurchase operations (prises en pension à 7 jours): they are used to inject additional liquidity at the initiative of banks, at a premium rate over the official intervention rate (currently 100 basis points). Any bank with the necessary collateral can get credit under this facility.

End-of-day settlement operations (opérations de fin de journée or operations ponctuelles): they allow commercial banks, at their own initiative, to obtain or place liquidity at the official intervention rate, during the day.

Weekly bids for liquidity (appel d’offres de reprise de liquidité): they are used, instead of the liquidity auctions, when the banking system as a whole is over liquid, to mop up excess liquidity by accepting bids for the placement of liquidity over 7 days. The demands are ranked and satisfied according to the rate that is proposed; the rate cannot exceed that of the weekly liquidity auctions.

Reserve requirements (réserves obligatoires): they are calculated as monthly averages, and must amount 2 percent of Tunisian dinar sight and term deposits, as well as other financial products and certificates of deposit. They are not remunerated, and are not actively used as a monetary policy instrument.

72. Nevertheless, the interest rate structure does not reflect market forces. De facto, the money-market rate does not fluctuate between the auction rate and the seven-day reverse repurchase operations rate since banks can obtain liquidity from the central bank at any time at the auction rate. In addition, the auction rate remained the same over the two years preceding its February 1999 reduction. Consequently the money-market rate is most of the time equal to the auction rate, and the money market is not very active.

73. Although most interest rates were liberalized in 1987, 1994 and 1996, some deposit rates remain regulated. Interest rates on sight deposits (up to 3 months) must not exceed a ceiling of 2 percentage points, and those on special saving deposits, which accounted for about 40 percent of total deposits of the public in the banking system at the end of 1998, are set at 2 points below the money market rate. Saving accounts dedicated to housing financing have a fixed credit rate of 5.25 percent.27 As for interest rates on convertible dinar deposit accounts, they must be set, at least, at 2 points below the money market rate.

D. Monetary Developments

74. In 1997 and 1998, the growth rate of the broad monetary aggregate (M4), which includes long-term deposits, highly liquid treasury bills, and short-term commercial paper, remained roughly in line with nominal GDP growth (respectively 9.6 percent and 8.9 percent) and the authorities’ monetary targets.28 Inflation went down to 3.7 percent in 1997 and 3.1 percent in 1998.

75. Liquidity expansion in 1997 and 1998 resulted from three main factors: (i) the payment by the BCT of arrears of the Cereals Board and the National Oil Board on their liabilities to banks;29(ii) the increase in net foreign assets due to several Euromarkets issues by Tunisian banks; and (iii) the elimination of penalty reserve requirements related to mandatory lending provisions (ratio des activités prioritaires).30 The central bank continued to absorb the excess liquidity, thus contributing to limiting the expansion of bank credit to the economy (9.7 percent in 1997, 7.8 percent in 1998). Bank credit to the central government remained negligible, both in 1997 and 1998.

76. After decreasing in late 1996 to reflect the slowing down of inflation, nominal interest rates were very stable in 1997 and 1998. The central bank cut its intervention rates by 1 percentage point in November 1996 to 6.88 (auction rate) and 7.88 percent (refinancing window rate) and kept them at the same level until February 1999, when it lowered them again by 1 percentage point. The overnight money market rate, which had been close to the refinancing window rate for several years, dropped at the end of 1996 to the level of the auction rate; i.e., at the bottom of the corridor defined by the central bank’s intervention rates. At the beginning of 1997, the 52-week treasury-bill rate, which had been for several years above the refinancing window rate, fell toward the auction rate. As for the 5-year treasury-bill rate, after having been about 1 percentage point above the refinancing window rate, it progressively reached the level of the latter in May 1998 (Chart 2).

Chart 1.
Chart 1.

Tunisia: Fiscal Development, 1991–98

(In percent of GDP)

Citation: IMF Staff Country Reports 2000, 037; 10.5089/9781451837773.002.A001

Sources: Data provided by the Tunisian authorities; and Fund staff estimates.1/ Includes the social security, but excludes grants and privatization proceeds.2/ Starting in 1997 includes transfers for wages of local government and embassies, previously recorded under transfers.
Chart 2.
Chart 2.

Nominal Interest Rates, 1995–99

Citation: IMF Staff Country Reports 2000, 037; 10.5089/9781451837773.002.A001

77. Since the Tunisian money market has been characterized by excess liquidity from the end of 1996 until the end of 1998, the BCT has been frequently using reverse appels d’offresin order to drain liquidity out of the system and to stabilize the money market rate. The use of prises en pension had decreased since 1996 due to high amounts of liquidity in the system and more frequent overnight injections in favor of a number of banks (Chart 3).

Chart 3.
Chart 3.

Central Bank’s Interventions, January 1997–99

Citation: IMF Staff Country Reports 2000, 037; 10.5089/9781451837773.002.A001

Source: Central Bank of Tunisia.

E. Developments in Financial Markets

Foreign exchange market

78. An interbank foreign exchange market was created in March 1994, and a forward foreign exchange market was established in July 1997. The latter covers forward transactions related to commercial activities: up to 12 months for imports, 9 months for exports of goods, and 12 months for exports of services. At the same time the limit imposed by banks on open positions on each foreign currency was increased from 5 percent to 10 percent of capital.31

79. The volume of operations on the interbank foreign exchange market amounted to US$4.2 billion in 1997 and US$5.1 billion in 1998, of which respectively 25 percent and 34 percent involved the central bank. There were very few forward operations between banks, since most of them were between banks and enterprises (for total amounts of US$77 million in 1997 and US$278 million in 1998).

Money market

80. The domestic money market in Tunisia, which is composed of the interbank market, the markets of certificates of deposit, commercial paper, and treasury bills, remains shallow. (Chart 4). Volume is stagnant and the average rates have remained almost completely stable for the past two years. The overnight rate is the same as the auction rate (appel d’offres).

Chart 4.
Chart 4.

Money Market, Stocks of Securities and Volume of Operations, 1997–99

Citation: IMF Staff Country Reports 2000, 037; 10.5089/9781451837773.002.A001

Government securities market

81. The treasury bills, which were introduced mainly to finance the budget deficit, were issued until March 1999, in two different forms. The transferable treasury bills (bom du Trésor cessibles (BTC)) which were introduced in 1989 with maturities ranging from 13 weeks to 7 years, and have been sold to the public through the banks, are highly liquid instruments as banks are required to buy them back from their clients at face value (with only a small discount for operation costs). They have been sold to the public at interest rates below the rate, at which they were issued, ensuring a profit margin for the banks. Outstanding transferable treasury bills amounted to TD 3 billion at end–1998. The negotiable treasury bills {bons du Trésor négociables en bourse (BTNB)) were introduced in 1993 with a view to supplying a long-term financial instrument, fostering the development of a secondary market, and allowing for a market determined yield. They are auctioned to stock exchange intermediaries and listed on the stock exchange. While outstanding negotiable treasury bills amounted to TD 493 million at end-1998, a liquid secondary market did not develop for several reasons: the maturity dates changed from auction to auction, repayment could be either at the end or in equal annual installments, stock exchange intermediaries had no market- making obligations and the tax regime was complex to implement and penalizing for the traders.32

82. A new type of treasury bill, the fungible treasury bill (bons du Trésor assimilables (BTA)) was issued for the first time in March 1999 to overcome these problems. They will be auctioned monthly. The maturity dates, 5 and 10 years initially, and the coupon interest rates are to remain unchanged for several auctions, so as to create sufficiently large stocks for each line. The tax regime was also expected to be simplified and more neutral.

Stock market

83. The stock market index remained broadly stable in 1998 after plummeting in 1996/1997, and increased sharply over the first 4 months of 1999. Market capitalization stood at 11 percent of GDP at end-1998, still considerably lower than its peak of 23 percent of GDP in 1995. Trading volume increased by 57 percent in 1998, reaching a total amount of TD 927 million (Chart 5), of which 48 percent was net foreign purchase, and 4 additional enterprises were listed.33 Nonresidents were holding 21 percent of the capitalization at the end of 1998.

Chart 5.
Chart 5.

BVMT Index, 1996–99

Citation: IMF Staff Country Reports 2000, 037; 10.5089/9781451837773.002.A001

Sources: Central Bank of Tunisia; and Middle East Economic Digest.

84. Efforts to modernize the market were pursued in 1998 and at the beginning of 1999. To improve its compliance to international standards at the beginning of 1998, the Tunis stock exchange launched a new index weighted by market capitalization (TUNINDEX), and disseminated quotations on Reuters. In February 1999, additional measures were announced by the government to further develop the market; they will be effective in fiscal year 1999:

  • The income tax rate will be cut from 35 percent to 20 percent during 5 years for enterprises which sell at least 30 percent of their capital to the public,

  • Conditions will be eased for enterprises to buy back their own shares on the market,

  • Stockholders will be authorized to deduct the depreciation of their stock portfolio from their taxable income,

  • Small investors will be offered 5-year saving schemes in stock market accounts, that will involve tax cuts on earned income.

F. Financial Soundness of the Banking System34

85. While the capital structure and the quality of most banks’ portfolios are still in need of substantial improvements, efforts undertaken in the last 6 years have already borne remarkable results, especially for commercial banks (see table below). Their nonperforming loans amounted to 34 percent of total commitments in 1993, against 19.5 percent at end-1998. 24.5 percent of these nonperforming loans were covered by provisions in 1993, against 59.8 percent at end-1998. The situation of the development banks is more worrisome, with 67.5 percent of their commitments classified as bad loans and only 41 percent of the latter provisioned at end-1998.

86. Comprehensive prudential regulations adopted at the end of 1991 introduced strict standards for loan classification and provisioning,35 and in mid–1993 the central bank set detailed terms of reference for external audits of banks and off-site reporting requirements. However, there is no minimum ratio of capital over total non-risk weighted assets, neither capital requirements against market risks. In addition, there is no minimum ratio between demand liabilities and highly liquid assets, neither a minimum ratio between total liability and total liquid assets.

87. A major plan to restructure and strengthen the banking sector is under way with the support of the World Bank, under a second Economic Competitiveness Adjustment Loan (ECAL II). Its main components are the following:

  • Restructuring of the stock of nonperforming loans to public enterprises:

  • ✓ Government guarantee of banking claims on public enterprises that are to remain publicly-owned and active, for the amount registered at the end of 1997;

  • ✓ Purchasing by the State of the banking claims on public enterprises liquidated or to be liquidated or privatized, without interest and with a 25-year repayment period.

  • Strengthening of the regulatory and prudential framework:

  • ✓ Higher capital adequacy standard; starting at the end of December 1999, the capital adequacy ratio will be raised from 5 percent of tier 1 capital to 8 percent of tier 1 and tier 2 capital;

  • ✓ New financial disclosure standard; a new bank accounting framework in line with international standards and requiring presentation of consolidated financial statements will be enforced in fiscal year 1999, and clear rules on loan write-offs will be introduced.

  • Reorganizing the banking system structure:

  • ✓ A single bank charter, govering all Kinds of banks, will be introduced in 2000;

  • Mergers between development and commercial banks will be authorized and the merger of UIB (Union Internationale de banques) and BTEI (Banque de Tunisie et des Emirats d’investissement), as well as that of STB (Société tunisienne de banque), BNDT(Banque nationale de développement touristique) and BDET (Banque de développement économique de Tunisie) are expected to take place in 2001.

  • Modernizing the check clearing and bank payments system with the implementation in year 2000 of an electronic payment system. This system will be under the responsibility of the central bank and should allow checks and other bank payments to be settled within 48 hours.

88. In addition, the central bank will implement two new databases directly accessible by the banks: one giving information on payment incidents and financial situation of clients (centrale d’information), and the other one providing information on the amount of credit by household (fichier des crédits aux particuliers).

Tunisia: Asset Quality Indicators of Tunisian Banks, 1993–98

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Source: Central Bank of Tunisia.(1) The 1997 percentage increase for private banks mainly reflects the reclassification of Banque du Sud as a private bank following its privatization.

VI. External Sector Developments

A. Current Account

89. After several years of consolidation, Tunisia’s current account deficit increased for the second consecutive year in 1998 (Table 22). The deficit reached 3.4 percentage of GDP, compared to 3.1 percent in 1997 and 2.4 percent in 1996. The 1997-98 current account deterioration is largely explained by adverse but temporary external price developments as well as by a surge in imports related to a large foreign direct investment. However, should the trend continued in 1999, it could also put into question the level of Tunisia’s structural competitiveness. The terms of trade deteriorated by 2.7 percent in 1998, following a 3.6 percent fall in 1997. A drop in export prices of crude oil and agricultural commodities, unmatched by a smaller import price fall, caused the deterioration. These adverse external price developments account for 2 percentage points of GDP in the 1997 external imbalance and another 1.2 percent in 1998. Terms of trade are projected to bounce back by 3.4 percent in 1999.

Export performance

90. Over 1990-98, exports of goods increased by an annual average of 5 percent in real terms, a progression close to the real GDP growth, although significantly lower than the 6.8 percent world trade annual growth during the same period. In the last few years, however, export volume had been growing at a faster pace, of 10.1 percent in 1997 and 6.3 percent in 1998. Manufacturing exports were even more buoyant, reaching 7.7 percent growth during the 1990s, and more than 10 percent in the last two years, thereby improving Tunisia’s world market share in the recent years. The coming into effect of the free trade association with the European Union (EU) (Box 5) may have played a positive role since it triggered in 1996 a significant decline in the cost of imported equipment and input prices, which lowered the production costs of exports industries. In the years ahead, however, Tunisian exports will be confronted with several challenges:

  • Both geographical concentration and product specialization of Tunisian exports are not oriented toward fast-growing markets (Tables 26 and 21). Growth prospects of EU markets, which accounted for 79 percent of Tunisian exports in 1998, are modest, compared to those of buoyant North American, and re-emerging South East Asian markets. In addition, textile products, which account for more than half of Tunisian exports, are among the slow- growing segments of world demand.

  • Competition in Tunisia’s export markets is intensifying. A number of Asian competitors are now slowly emerging from the crisis, with depreciated currencies and improved structural competitiveness. They will likely take advantage of several ongoing multilateral and regional trade reforms, including increased access to European markets. Phase II of the WTO Agreement on Textile and Clothing (ATC) schedules the removal of quotas for an additional 17 percent of the concerned products, and a 25 percent increase in annual growth for remaining quotas of textile products over 1998-2001 for the EU and several other importers. These removal and increase of quotas should accelerate further after 2001, until a full liberalization is achieved in 2005. In addition, EU tariff barriers against Turkey and Central European countries are progressively removed with the recent entry into force of the customs union or association agreements between the EU and these countries.

91. Although it is too early to draw firm conclusions, available information for the five first months of 1999 indicate that export growth is slowing down in spite of record agricultural exports.36 In the textile/clothing and mechanical/electrical industries—respectively the largest and the most dynamic export sectors—the slow-down is substantial and does not seem to be triggered by specific and reversible factors.37 The authorities are projecting for the year as a whole that total exports will grow by only 3.6 percent in real terms and non-oil exports by 3.5 percent.

The Association Agreement Between Tunisia and the European Union

In an effort to further deepen its economic and financial relations with Europe, in mid-1995 Tunisia concluded an Association Agreement with the EU. The Agreement provides for a far-reaching liberalization of trade relations, enhanced financial and technical cooperation, and close collaboration in many areas, including cultural and political matters.

The Agreement phases in free trade in industrial goods over 12 years. Under the previous trade and cooperation agreements, in effect since 1976, nearly all of Tunisia’s industrial exports had free access to EU markets. The main exemption was for certain textiles, for which a voluntary export restrain was, however, rarely binding. Under the new Agreement, this preferential access is preserved and extended to textiles, while Tunisia dismantles, over 12 years, all tariff and nontariff barriers to industrial imports from the EU, subject to a number of safeguard provisions. Quantitative restrictions and tariffs on a large number of items—mainly equipment goods—were abolished immediately as the Agreement came into effect for other categories of products, tariff reductions are to be fully eliminated by 2008 with a five-year grace period (on starting date of implementation) accorded to locally produced goods facing competitions from EU producers. Agricultural products are not covered by the Agreement, and tariffs on certain goods may be maintained in proportion to their agricultural content (the "agricultural element"). The Agreement provides that the EU and Tunisia will review the trade regime for agriculture in the year 2000. For specific agricultural products, the Agreement consolidates, and in some cases improves, the existing preferential mutual access.

The Agreement goes well beyond the existing framework of cooperation by calling for a comprehensive harmonization of norms and standards and of the regulatory framework, with a view to eliminating practices that distort trade between the partners, including monopolies, government subsidies, or privileges granted to public enterprises. Economic and financial cooperation is to be strengthened, particularly to support industries that will face difficulties in adjusting to free-trade agreement (mise à niveau program), promote intra-Maghreb regional integration, and enhance environmental protection. Financial support for Tunisia’s adjustment and development efforts is provided from EU resources under the EU’s Mediterranean Initiative.

The Agreement also calls for active cooperation in social areas, such as social development and immigration to Europe, and consolidates the existing rights and obligation of expatriate workers.

Impact of the Agreement

A study commissioned by Tunisia’s Ministry of International Cooperation and Foreign Investment estimated that the Agreement would produce a long-term (static) gain of 1.4 percent of GDP (when all factors of production are reallocated) and larger gains if liberalization is extended to non-EU imports. In the short run—when labor, but not capital, could be reallocated—gains are estimated to be negligible.

The Agreement will have a significant fiscal impact, resulting from the elimination of import duties, which accounted for about a fifth of total tax revenue at the time of the Agreement was signed. The cost of foregone revenues is estimated to reach 3.5 percent of GDP by 2008. This loss may be partially offset by the revenue impact of faster economic growth. IMF technical assistance was provided in 1996 to identify compensatory tax measures, most of which have since been put in place, except for the proposed elimination of tax exemptions.

Market shares

92. At the aggregate level, Tunisia has not gained market shares on its main market, the EU, since 1994. In contrast to the Central European countries, Tunisia’s market share progression in textile products is not substantial enough to offset the lower than average growth of the EU textile market. Tunisia’s market shares as a whole have been stabilizing over 1994–96 at 0.24 percent of total EU imports, from 0.19 percent in 1990. During the same period, Asian emerging economies market shares increased to 7.3 percent from 4.6 percent, and Eastern Europe’s market shares trebled, to 2.4 percent.38 A similar contrast exists for manufacturing imports in the EU between Tunisia and its main competitors(Chart 7).

Chart 6.
Chart 6.

Tunisia: Composition of Trade, 1990–98

(In millions of dinars)

Citation: IMF Staff Country Reports 2000, 037; 10.5089/9781451837773.002.A001

Source: Ministry of Economic Development.
Chart 7.
Chart 7.

Manufactured Export Market Shares in EU

(in percent)

Citation: IMF Staff Country Reports 2000, 037; 10.5089/9781451837773.002.A001

Source: United Nations, TARS; and Fund staff estimates.1/ Czech Republic, Slovak Republic, Bulgaria, Hungary, Poland, Romania.2/ China, Malaysia, Thailand.3/ Hong Kong, Korea, Singapore, Taiwan.
Chart 8.
Chart 8.

Textile Export Market Shares in EU

(in percent)

Citation: IMF Staff Country Reports 2000, 037; 10.5089/9781451837773.002.A001

Source: United Nations, TARS; and Fund staff estimates.1/ Czech Republic, Slovak Republic, Bulgaria, Hungary, Poland, Romania.2/ China, Malaysia, Thailand.3/ Hong Kong, Korea, Singapore, Taiwan.

93. Tunisia’s textile market share in the EU continues to improve, however at a much lower pace than that of Eastern European countries. The gap between the two has widened sharply since 1990. In 1996, Tunisia’s share was 3.6 percent as compared to 8.4 percent for the Eastern Europe. Preliminary figures for 1997 indicate a stabilization of Tunisia’s market shares. The Asian emerging economies experienced a small decline in market share in EU from 10.8 to 9.6 percent over the same period, but this was offset by large gains in the market share of more dynamic segments such as electronic products.

94. These developments illustrate the main challenges facing the Tunisian export industries in the years ahead: resisting increased competition pressures from new European competitors on traditional markets while accelerating its product diversification in high growth high value- added segments.

Export promotion policies

95. Aware of these challenges, the authorities are considering a range of actions to promote exports, without resorting as in the past to distorting nonmarket incentives and state intervention. Several reforms have been implemented to make Tunisia a more attractive place for establishing export industries. Oligopolistic sea transportation arrangements between state- owned and foreign companies were suppressed in 1998, allowing for a reduction of 10 percent in transportation costs on the most frequently-used sea route (Tunis-Marseille). Sea transportation costs are also being reduced with the opening to private competition of certain port handling activities. Last but not least, customs clearance procedures are being simplified with the introduction of a single document (liasse unique).

96. Moreover, the program of industrial restructuring (mise à niveau) which has been designed to assist enterprises to adjust to the EU free trade agreement context has already enabled some export-oriented companies to shift to more profitable activities, including in the textile industry.

97. In spite of the already large share of textile products in Tunisian exports, the authorities consider that there is still some scope for further progression by: (i) diversifying away from the textile garment industry towards other segments such as footwear; (ii) helping the modernization of textile factories; (iii) systematizing a niche strategy that would take advantage of Tunisia’s proximity with European consumer markets to produce highly-priced small series in short time spans; (iv) promoting Tunisian products in nontraditional European markets such as the United Kingdom; and (v) securing access to retail traders through direct investment in European trading companies.

98. This active strategy in the textile sector also aims at increasing the local value-added content of textile exports. Textile production is mostly undertaken under offshore arrangements. Duty-free imported inputs undergo little transformation before re-exports. Vertical integration efforts might well prove to be a risky strategy, first because it requires substantial capital investment to develop textile industries upstream, and second, it might run counter to the flexible cost-reducing strategies of international textile groups.

Imports of goods

99. The projected slowing down of exports growth in 1999 contrasts with a projected high growth of real imports, exceeding real GDP growth for the third consecutive year. Imports of capital goods, sustained by investment, remain the most dynamic component of imports. In 1997, they reached a 17 percent increase in real terms, reflecting mainly a catching up due to the pre-announced elimination of import duties on equipment goods, from end-1996. However, imports of capital goods increased by 10 percent in 1998 and are projected to grow by an other 15 percent in 1999, in part pushed by substantial investments by state-owned enterprises, including a TD 400 million import of airplanes by Tunis Air. Import volumes of energy products are projected to grow by 19 percent in 1999 while food imports should stay almost stable, these contrasted developments reflecting changing conditions in the local supply of these products.

100. Prospects for lower import growth in the coming years is all but unlikely, given the implementation of further trade liberalization, including the dismantling of tariffs on EU imports for products which are in direct competition with local products. Whether the investment efforts of the past three years will have a positive impact on the current account in the long run, either through reduced imports or increased exports, remains uncertain since part of these investments are still in the public sector, or in industries which benefit temporarily from increased effective protection (such as food processing or building materials).

101. Notwithstanding the impact of the Association Agreement, Tunisia’s trade regime remains restricted and has a rating of 8 (on a scale of 1 to 10) in the Funds’ overall trade restrictiveness index. Tunisia’s average tariff level is estimated at 33.6 percent as compared to the current average for all Fund members at 14 percent. There are currently 5,099 tariff lines and tariffs range between 0-225 percent.

Tourism and other services

102. Tourism receipts and exports of business services are Tunisia’s main tools to offset a further deterioration in the trade balance. The surplus in the balance of nonfactor services remained large in 1998, at some 7.8 percent of GDP, thanks to buoyant tourism receipts, but also to the rapid development of several categories of business services, including construction and software and data-processing services. Tourism services account for more than half of service exports, equivalent to 26 percent of exports of goods. Over the last two years, tourism receipts increased by 25 percent in Tunisian dinar terms, in line with the growing entries of nonresidents in the country (21.4 percent) and the larger number of nights spent in Tunisia (19.3 percent) (Table 9). During the same period, a marked reduction in tourism investments slowed down the development of hotel capacities. As a result, the rate of occupancy improved from 49 percent to 52 percent, increasing thereby the profitability of the sector. In 1998, about 4.7 millions of foreign tourists visited Tunisia, of which 3 millions were Europeans. In 1999, tourism receipts will still be buoyant, in part due to exceptional factors such as the war in the Balkans and political unrest in Turkey that have diverted European tourists away from other Mediterranean regions. The authorities are nonetheless confident that tourism receipts will continue to progress in the medium term, thanks to the industry’s efforts to improve the quality and diversify of services in this sector. Substantial projects for direct investment in the tourism sector by large European tour operators are an encouraging sign in this direction.

B. Capital Account 39

103. In the face of unfavorable high spreads, Tunisia decided not to tap international markets in 1998. Net capital inflows amounted to only TD 500 million, insufficient to finance the current account deficit. The gap was financed by the depletion of official reserves, which declined to only 2.6 months of imports of goods (CIF) at end-1998. Gross official financing flows (TD 500 million) slowed down, a move partially offset by record direct investment (TD 850 million against TD 440 million in 1997) reflecting mainly privatization proceeds of two cement factories sold to foreign firms.

104. Net capital inflows are projected to more than double in 1999. Official financing will increase by TD 300 million, due in part to the recent disbursement of the first tranche of the World Bank’s second economic competitiveness adjustment loan and parallel financing from the European Union and the African Development Bank. In addition, commercial loans have been obtained for the import of airplanes. Finally, as spreads on emerging economies bond markets are currently returning to lower levels, the authorities are planning to tap again the international financial markets for about TD 500 million. A 10-year bond issue of € 250 million was issued in mid-July at a spread of280 basis points over equivalent German Bunds. However, the slowing pace of the privatization process will not ensure foreign capital inflows of the same magnitude than those of last year. As a result, the authorities are projecting only a slight improvement in the level of official reserves (to 2.7 months of imports) at end-1999.

C. External Debt

105. As of end-1998, Tunisia had a sizeable although sustainable and declining external indebtedness. Total external debt amounted to US$11.3 billion, the equivalent of 55 percent of GDP, down from 61 percent in 1997.40 Debt service payments absorbed 19.2 percent of the exports of goods and services. Public and publicly-guaranteed debt accounted for 80 percent of the total and consisted mostly in medium and long term maturity debts. Short-term debt (US$1.6 million) was mostly contracted by the private sector, of which US$400 million were trade credits.41 The remaining debt was made of short-term liabilities of the banking system, the equivalent of two-thirds of the official reserves as of end-1998. Although the latter figure could indicate some short-term vulnerability in the Tunisian external position, more than half (US$673 million) of these short-term liabilities are foreign-currency or dinar convertible deposits of nonresidents in the banking sector. Since they consist mainly of saving by Tunisian expatriates in preparation for their return to Tunisia, they are thus, according to the authorities, subject to lower risk of massive and rapid withdrawals. The central bank acknowledged, however, that such deposits are also yield-sensitive. Their increase over the past years is in part attributable to the relatively attractive interest rates offered on the dinar convertible deposits.42

D. Capital Account Liberalization

106. Given Tunisia’s increasing capital needs, but also in view of the recent developments in Asian capital markets, the authorities are comforted in their strategy of gradual and cautious capital account liberalization. Capital transactions in Tunisia are still subject to a large number of restrictions, both on the inward and outward directions. In the past two years, the central bank took some additional deregulation measures. Resident enterprises have been allowed to keep up to 50 percent (from 40 percent) of their export proceeds, and up to 50 percent of the proceeds of their borrowing abroad, in foreign currency deposits. Banks can now grant short term credits in Tunisian dinars to offshore enterprises, to finance local operations. Nonresidents, who are still forbidden to make any transactions on treasury bills, have been allowed to buy shares of Tunisian companies provided that the total share of foreign participation does not go beyond a ceiling of 50 percent. The latter measure may raise, however, a number of practical impediments when the actual foreign share is already close to this ceiling. More generally, the external challenges facing the authorities for the years ahead add to the need for a more ambitious strategy to attract foreign direct and portfolio investment. This might require broadening the authorizations of foreign investment, presently limited to the manufacturing, energy and tourism industries, to the other sectors.

E. Exchange Rate Policy

107. Exchange rate policy has been guided by a real exchange rate objective based on a basket of competitor and partner countries. The rule is interpreted flexibly by the central bank, which may allow the real exchange rate to deviate from the target in order to smooth movements in the nominal exchange rate. Information on the basket is not disclosed.


Table 1.

Tunisia: Sectoral Distribution of GDP at Constant Prices, 1994–98

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Source: Ministry of Economic Development.
Table 2.

Tunisia: Sectoral Distribution of GDP at Current Prices,1994–98

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Source: Ministry of Economic Development.
Table 3.

Tunisia: Supply and Use of Resources at Current Prices, 1994–98

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Sources: Ministry of Economic Development; and Fund staff estimates.

Includes the social security system.

Includes all economic agents except the consolidated central government

National account concept.

Table 4.

Tunisia: Supply and Use of Resources at Constant Prices, 1994–98

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Sources: Ministry of Economic development; and Fund staff estimates.

Includes the social security system.

Includes all economic agents except the consolidated central government

Table 5.

Tunisia: Gross Fixed Capital Formation by Economic Sector and Financing, 1994–98

(In millions of Tunisian dinars)

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Source: Ministry of Economic Development.

Includes Gazoduc (1992-94) and Miskar (1992-95) projects.

National account concept.

Table 6.

Tunisia: Production of Major Agricultural Crops, 1994–98

(In thousands of metric tons)

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Source: Ministry of Agriculture.

Includes triticale.

Table 7.

Tunisia: Supply and Use of Cereals, 1994–981/

(In thousands of metric tons)

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Source: Ministry of Agriculture.

By crop year (July/June).

Commercialization of the previous year’s crops.

Covered by official marketing.

Table 8.

Tunisia: Energy Production and Consumption, 1994–98

(In thousands of metric tons)

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Sources: Ministry of Industry; and Direction Générate des Mines

In thousands of tons of oil equivalent.

In kind royalties from the trans-Tunisia pipeline carrying gas from Algeria to Italy

Production by the state company STEG (excluding production by private plants).

Table 9.

Tunisia: Indicators of Tourism Activity, 1994–98

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Sources: National Tourism Office; and Central Bank of Tunisia.
Table 10.

Tunisia: Consumer Price Index, 1994–98

(Annual average: 1990 = 100)

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Sources: Central Bank of Tunisia; and National Institute of Statistics (INS).
Table 11.

Tunisia: Producer Price Index, 1994–98

(Annual average: 1990 = 100)

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Sources: Central Bank of Tunisia; and National Institute of Statistics (INS).
Table 12.

Tunisia: Producer Prices of Principal Agricultural Commodities, 1994–98 1/

(In Tunisian dinars per ton)

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Source: Ministry of Agriculture.

By crop year (July/June).

Table 13.

Tunisia: Consolidated Financial Operations of the Central Government, 1994–98 1/

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Source: Data provided by the Ministry of Finance.

Includes special funds, fonds de concours, operations financed abroad, net treasury operations and the social security funds.

Excludes privatization proceeds.

Starting in 1997 includes the wage bill of local governments, établissements publics á caractère administratif (EPA) and établissements á caractère industriel commercial non marchands (EPIC), and of embassy personnel previously classified as transfers.

Includes interest on arrears related to the operations of the consumer subsidy fund (CGC).

Excludes the social security system.

Includes government debt instruments held by the social security system, and the debt assumed by the CBT in 1996 related to quasi-fiscal operations.