A day before Tunisia went into lockdown on March 22 to prevent the spread of COVID-19, Prime Minister Elyes Fakhfakh announced a set of financial measures to mitigate the impact on the economy, including the establishment of a US$860 million fund to support businesses. The money was redirected from other government projects under the 2019 budget. The Central Bank of Tunisia has lowered interest rates, delayed loan payments, and waived fees for ATM cash withdrawals. The Tunisian Union for Industry, Trade, and Handicrafts (UTICA), representing Tunisia’s private business sector, is in talks with minister of finance Mohammed Nizar Yaiche on further measures the government can implement.
UTICA vice president Hichem Elloumi described the efforts as good and a necessary action, but fears they may not go far enough. In particular, Elloumi is concerned about smaller enterprises and the self-employed who rely on cash and don’t have bank accounts. Tunisia’s manufacturing sector was already taking a strong hit as European car manufacturers halted operations, drastically cutting demand for machine parts imported from Tunisia. Tourism, an industry that employs about 2 million Tunisians directly and indirectly, has also taken a heavy hit.
Speaking with Al-Monitor, banking expert Ezzedine Saidane said that the Tunisian government is already displaying “signs of being overwhelmed” by the steep economic downturn. Saidane regards the business support fund as insufficient and takes issue with the International Monetary Fund’s US$400 million loan to assist with handling COVID-19, as the international organization “has already refused to pay the further US$1.2 billion that Tunisia was asking for”.
Why It Matters
Since former president Zine El Abidine Ben Ali was ousted in 2011, Tunisia has managed to weather some turbulent periods in its transition to representative democracy to finally reach a modicum of political stability. The protracted fight to form a coalition government risked a dissolvement of parliament and a new round of elections, jeopardizing the fragile balance of power between Tunisia’s more than two dozen political parties. Now, with COVID-19 throttling the country’s critical tourism industry and shutting down businesses, the economic downturn pushes Tunisia yet again into political uncertainty. How the current Assembly of the Representatives of the People forges ahead will either secure the position of the ruling Ennahda Movement coalition or see it crumble.