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

The Economy Government Role in the Economy The government of Tunisia has been methodically reducing its role in the economy. By 1994, forty-six of the 189 public enterprises were completely or partially privatized either through sale of shares or assets; most of these forty-six firms, however, were small-scale. Although the privatization program is supported by the National Labor Federation (UGTT), the government is moving carefully to avoid mass firings in unprofitable public companies. The government is focusing on the stock market as the principal vehicle for the privatization program. Specific targets are companies operating in competitive sectors. TunisAir and other major state-owned companies will be partially or wholly privatized by selling shares through the stock market. The most dramatic re-orientation has occurred in the financial and banking sectors. The Central Bank is gradually shifting to a supervisory and regulatory role. Interest rates were officially deregulated and commercial banks allowed to move into the long term credit market. The government made the Tunisian Dinar convertible for current account transactions, and currency trading was privatized. In the financial markets, the former state controlled stock exchange, the Bourse, was privatized. The new structure is composed of brokerage houses. Similarly, a privately held central stock clearing house company was established. The state will continue to exercise its supervisory and regulatory role through the Financial Market Council. In 1995, the government restructured its economic ministries. The former Ministry of National Economy was split into the Ministries of Industry and Commerce. The Ministry of Industry is responsible for improving the international competitiveness of Tunisian industry. It also retains control of the majority of state owned industries. The Ministry of Commerce manages consumer subsidy and price control policies. Finally, the Ministry of Economic Development, formerly the Ministry of Planning, is responsible for long-term budget and policy development. Reforms Tunisia, under the influence of no-nonsense president Ziad Ben Ali, has implemented an International Monetary Fund-style economic stabilization program, highlighted by rigorous budget balancing, foreign trade liberalization and private sector incentives. Consequently, economic growth rates have surged. Not surprisingly, so, too, has the rate of direct foreign investment, which according to official statistics was up 22 percent during the first nine months of 1995 from the comparable period in 1994, to some US$ 300 million. Most of this capital came from European Union investors who were encouraged by Tunisia's proximity to southern Mediterranean markets, relatively low cost labor force and enhanced fiscal transparency. It has been in the vital area of local economic restructuring where Ben Ali's accomplishments have been most impressive. Within the past year or so, Tunisia has emerged as the unqualified financial success story of Arab North Africa, with high GDP growth rates (7 percent for 1996), relatively low inflation rates (6.1 percent in 1995), and a highly comand rigorously realistic exchange rate structure. In addition, Tunisia took in foreign capital in 1994 by issuing a samurai bond (Japanese yen denominated government paper). In order to do so, it became the first Arab country to be assigned a country credit rating provided by the Japan Bond Research Institute. If there are any gathering storm clouds on the Tunisian horizon, they are probably in the area of nascent privatization, where turf conscious Tunisian bureaucrats frequently erect obstacles for local businessmen. Barriers, however, are slowly falling (particularly in the area of agriculture), and all signs now point towards considerably higher levels of both local and foreign investment and sustainable overall economic growth. Previous Chapter Contents Menu Next Chapter

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