(Ecofin Agency) - Tunisia's state wage bill increased to 17.6% of GDP. According to the International Monetary Fund (IMF), which issued a new document on the country’s economic situation, this ratio is one of the highest worldwide.
Like many other countries, Tunisia had to hire additional health workers to deal with Covid-19. It is estimated that the health sector accounted for 40% of new hiring in the country in 2020.
Let's recall that Tunisia is already suffering a double pressure of a large budget deficit (11.5% excluding grants), and rising public debt and higher salary expenditures will not help. Also, although the government has carried out new recruitments, the unemployment rate in the country has increased, reaching 17.4% in the fourth quarter of 2020.
“Higher outlays were offset by lower investment spending and energy subsidies. As a result of the increase in the fiscal deficit and contraction in GDP, central government debt is estimated to have increased to nearly 87 percent of GDP,” IMF said.
Earlier this month, Finance Minister Ali Kooli expressed the need for additional IMF support. But for this investment to be done, the Tunisian State needs to find ways to lower the unemployment and debt and reduce its civil serviced salary bill; a goal difficult to reach, especially given the political tensions that have undermined efforts to revive the economy for several years, despite the commitments of public policymakers.
“Directors recommended that fiscal policy and reforms should aim to reduce the fiscal deficit. In this context, they underscored the need to lower the wage bill and limit energy subsidies while prioritizing health and investment expenditure and protecting targeted social spending. Directors noted that Tunisia’s public debt would become unsustainable unless a strong and credible reform program was adopted with broad support. They also called on the authorities to make taxation more equitable and growth-friendly and encouraged action to clear the accumulated arrears of the social security system,” the document reads.
IMF expects Tunisia’s GDP growth to increase by 3.8% this year after a contraction of -8.2% in 2020.
Moutiou Adjibi Nourou