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	Tunisia		Info-Prod Country Guide
CHARACTERISTICS   INDICATORS   THE ECONOMY   INVESTMENT ISSUES   PROJECTS   PROSPECTS

Principal Commercial and Political Characteristics General Tunisia, the Mahgreb’s smallest country, should not be overlooked because of its size. An examination of its economic data tells an impressive story. According to Tunisian government statistics, more than 60 percent of the population is middle class. Only 6.7 percent falls below the poverty threshold. The national savings rate is 23 percent and 81 percent of Tunisians own their own homes. Over 85 percent of Tunisian homes are connected to the electrical grid, and 70 percent have potable water. Since independence, Tunisia has traditionally taken a balanced approach to development that has emphasized family planning, education, and promotion of the status of women. Between 1987 and 1994, with International Monetary Fund (IMF) and World Bank support, Tunisia engaged in a series of important structural reforms. Tunisia simplified its tax system and reduced tax rates, with a fixed maximum rate of 35 percent. Banking and financial sectors were partly liberalized and restructured. Some public companies were privatized and foreign trade and domestic prices de-controlled. Unlike in most of the states of the region, the Tunisian economy is highly diversified, with the increasingly unreliable hydrocarbon sector now accounting for no more than 12 percent of local GDP. Tunisia enjoys preferred status for its exports to EU countries, and has significantly lowered local tariff barriers to EU imports. This latter provision in particular has caused some concern among local Mahgreb businessmen (in Tunisia, for example, the predicted flood of competitively priced European goods threatens to bankrupt upwards of a third of the country’s manufacturing companies), but buoyed by realistic prospects of developing economic integration with the EU, the risk is seen as worthwhile. Commercial Outlook As of 1995, 87 percent of prices are free at the production level and 85 percent at the distribution level. Over 93 percent of imports are unrestricted. At the end of the structural adjustment program in 1994, all basic economic indicators had improved. The average growth rate over 1987-1994 was 4.5 percent with an average inflation rate of 5 percent. The government budget deficit declined from 5.5 percent of Gross Domestic Product (GDP) in 1986 to 2.6 percent in 1994. Over the same period, the current accounts deficit went from 8 percent of GDP to 4.6 percent. Similarly, debt service as a percentage of exports declined from 27.9 percent to 18.5 percent. Constant GDP was US$ 12.8 billion in 1994 and US$ 13.3 billion in 1995, of which services accounted for about 33 percent. The manufacturing and agriculture sectors each comprised about 15 percent. Non-manufacturing industries, primarily phosphate mining and hydrocarbons, contributed 12 percent to GDP. The remainder was made up of non-commercial activities. Manufacturing consists primarily of textiles and food processing with textiles contributing over half the total revenue in the sector and most of the growth. Tourism plays the same role in the services sector. The Ministry of Tourism hopes to draw five million tourists annually by the year 2000, which is 25 percent above the current level. Political Outlook Tunisia is considered safe from an Islamic fundamentalist take-over. The thirty-one year rule of Tunisian President Habib Bourghiba (1956-87) left the country relatively free of bureaucratic corruption and steered it clear of the same command economy structure that decimated Algeria. At the same time, the Bourghiba regime also created the underpinnings of a basically secularist society; on one occasion he went so far as to defiantly drink a glass of water during the Muslim fasting month of Ramadan on state-run television. Today Tunisia is firmly in the hands of another committed secularist, the beneficent authoritarian Ziad Ben Ali, whose rigorously skeptical attitude towards democracy is probably best expressed in the 99 percent of the vote he captured during March 1994 presidential elections. Moderately concerned about the potentially destabilizing effects of home-grown Islamic fundamentalism, he has taken few chances with local activists of the officially banned Islamic Ennadha (Renewal) Party, arresting, converting or exiling them with scant regard to legal niceties. At the same time, he has also expanded on a flourishing social service net (Tunisian medical care and education are arguably the best in the Arab world), and kept the bureaucracy clean. Tunisia’s relations with neighboring Libya appear to be stable. In fact, Libyan leader Muammar Gaddafi began urging Tunisian businessmen to invest in his country in October, 1996. His calls for investments included the agriculture, fisheries, petrochemicals, iron and steel industries. Previous Chapter Contents Menu Next Chapter

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