Nearly three years later, Tunisia still hasn’t been able to fully recover from the January 14, 2011 revolutionary events at the security, political and social levels, but most importantly, at the economic level. The Tunisian economy has continued to stumble and even fall, at times, into recession.

Nearly three years later, Tunisia still hasn’t been able to fully recover from the January 14, 2011 revolutionary events at the security, political and social levels, but most importantly, at the economic level. The Tunisian economy has continued to stumble and even fall, at times, into recession.

Economists speak about a “foreseeable disaster” which will be reflected in bankruptcy if the current situation persists. Government and official authorities are trying to repudiate rumors about the possibility of this scenario and they claim that the economic conditions are stable as are the financial indicators related to prices, currency exchange rates and the size of investment.

“Tunisia is undergoing a very critical and difficult situation,” said Mustafa Kemal Nabeli, the former governor of the central bank. “We should embrace a culture of rescue, bring the country out of the power conflict crisis, which we are now experiencing, and abandon clinging to our political positions at the expense of security and the economy.”

However, Minister of Finance Elias Alfajfaj, underplayed the seriousness of the current situation, saying “We have not yet reached the bankruptcy stage, but the situation is difficult and dangerous.”

An alarming indicator

Moez al-Joudi, an economic expert, said ”The current economic conditions in Tunisia are very difficult and the horizons ahead of us are to some extent blurred. There are indicators that tell us that we are heading towards a new wave of increase in prices and unstable currency exchange rates. Furthermore, stock market indicators show that there is a continuous decrease in the prices at a daily rate since last month.  

This statement came after the recent developments on the economic level and which made the Tunisian people recall their concerns after the January 14 events. Among these concerns is the downgrading of Tunisia’s sovereign credit rating issued recently by the US Standard & Poor’s (S&P) agency and the crisis experienced by the Tunisian stock market, the financial indicators and the crisis of the tourism sector. The agency announced that it has downgraded Tunisia’s long-term sovereign debt rating in local and foreign currencies from ‘BB-’ to ‘B’.

Here is a quick interpretation of these symbols. BB- means that the economic situation of the country is quite unstable and it is advised not to lend it because it is not able to repay the debt according to the agreed upon dates and perhaps completely unable to repay the debt. The symbol “B” means that there is political turmoil and instability in addition to a significant financial turmoil and constant and sharp change in its indicators. This downgrading means that Tunisia is now just a few steps ahead of “C” rating, i.e, the grade of bankruptcy.

According to an official report issued by the Ministry of Regional Development and Planning on August 17, 2013, S&P based its downgrading of Tunisia’s sovereign rating on a number of justifications, most importantly the poor performance of the economy considering that external economic and financial indicators were below the estimates.  This has also been confirmed by the Tunisian stock market figures which indicate that the exchange rate of the Euro against the Tunisian dinar has risen to 2.260 and against the US $ to 1.650.   

The second main justification for lowering the credit rating of the country, according to the same report, is uncertainty dominating the Tunisian political scene, at least in the medium term, about the possibility of agreeing on a new Constitution and setting a date for the next elections.

Decline in tourism

Murad al-Hattab, an economic expert claimed that the assassination of opposition figure and National Constituent Assembly (NCA) member Mohammed Brahmi has made the economic risk in Tunisia a central issue for the transitional roadmap. Al-Hattab considered that “the relative collapse of the financial market, which is suffered by Tunisia today reminds us of the financial collapse of the Tunisian stock market in the wake of the assassination of the opposition figure Chokri Beleid in February 2013; which cost the country more than 15 million dinars in one week.”

Al-Hattab explained the repercussions of the political and security crisis in the tourism market and he confirmed that this year has witnessed a significant decline in tourism based on a hotel occupancy rate of less than 40% during the month of Ramadan and the decline in the tourism season’s revenues by more than 10%. 

He cautioned that in case foreign embassies use a warming scenario for their nationals in Tunisia, the losses of the tourism season would be “catastrophic”.

Conesus should be the title of this phase

Al-Hattab stressed that the current government is incapable of taking corrective decisions to address the weak economy and the financial sector to correspond to investments. “Even if all parties are able to reach a political consensus and find solutions to what is going on today in Tunisia, there is an urgent need to reconsider the current economic approach because the country is on the verge of falling into a fire hall which will burn everyone, if the situation is not dealt with in a very professional way and if the country is unable to restore the world’s confidence in it.”

Elias Alfajfaj, the Finance Minister, in his media remarks, did not conceal the seriousness of the situation in Tunisia. He compared between the risk of the deteriorating economic situation and that of terrorism and considered them as equally dangerous to the country.  He also held politics and politicians in government and opposition responsible for this deterioration and said that it is necessary for all parties to think together in order to find solutions to the crisis. Similar to the statements made by Hussain Abbasi, the Secretary-General of the General Union of Tunisian Workers, who described the economic conditions as “catastrophic,” and those made by Widad Bouchmaoui, the head of the Tunisian Union of Industry and Commerce (a businessmen’s organization), who expressed the fears of businessmen about the dangerous situation in Tunisia today, the Minister of Finance used an “alarming” tone in expressing his fears.

Ways out of the crisis

S&P agency focused on the need for a quick political and security stability in order to save the country from the current state of conflict and sharp polarization, which will gradually be reflected on the internal and external financial balances in the next few years. However, the agency reassured those who are concerned that donors at the international level are still ready to enable access to “official financing” if the government has a clear and strategic economic, financial, and  social programme.

The agency stressed that the prospect of improving the sovereign rating is linked to moving towards a diversified economy and a favorable business climate for investment in addition to freedom of information and the strengthening of the state institutions’ accountability. It advised the government to provide these conditions as reassurance messages and as serious willingness on the part of the government of assuming its responsibilities.