Tunisia’s Minister of Trade Ridha Lahouel says the government has done a lot to keep the average Tunisian from feeling the damage caused by a strong US dollar, inflation and the two deadly terrorist attacks, which threatened to destroy Tunisia’s economy. Government subsidies on food staples and the country’s strong export of dates saved Tunisia from economic disaster, he said.
Minister Lahouel, how do you assess the situation of Tunisian citizens suffering from a decline in their purchase power since the revolution?
Tunisia’s Minister of Trade Ridha Lahouel says the government has done a lot to keep the average Tunisian from feeling the damage caused by a strong US dollar, inflation and the two deadly terrorist attacks, which threatened to destroy Tunisia’s economy. Government subsidies on food staples and the country’s strong export of dates saved Tunisia from economic disaster, he said.
Minister Lahouel, how do you assess the situation of Tunisian citizens suffering from a decline in their purchase power since the revolution?
This issue is normal in transition phases that are accompanied by chaos and inflationary crises. However, since this government took over about a year ago, we have had more control over prices, to support the purchase power of Tunisians.
The inflation rate decreased from 5.7 percent last year to reach 4.2 percent last month. The most important thing is our ability to provide markets with products and goods so citizens can buy their everyday necessities like vegetables, grains and meat. Moreover, the major consuming seasons such as festivities and Ramadan have passed peacefully. Frequent Ministry of Trade interventions to supply meat prevented soaring prices.
Despite your efforts, Tunisians are still complaining about inflation.
We are not denying that citizens are disappointed due to the increase in the costs of transportation, housing, electricity, and health. But we have to admit that there is a notable decline in prices of agricultural products compared with the skyrocketing prices of last year when there was a severe shortage of vegetables.
Many suspicions exit about prices manipulation and monopoly and weakness of control?
On the contrary, we are vigilant, more than ever before, in tightening the grip on economic surveillance and punishing manipulators and monopolists. We keep a daily and meticulous follow up of price trends”T in order to take the appropriate measures.
Every morning I arrive at my office, I call the provincial trade managers to check the market and the prices before taking urgent decisions when increases are noticed in the prices of agricultural products. Nevertheless, when shortages appear in basic products, we do not delay importing them to eliminate monopolies and provide for the basic needs of citizens.
What are the new measures related to subsidized goods in the budget law for 2016?
The Ministry of Trade budget is about USD 800 million of which 95% is allocated to subsidizing basic goods, i.e., vegetable oils, dough and sugar etc. Knowing the continuous increase in US dollar value, there will definitely be a forthcoming increase in the prices of basic goods since imported grains, oils and combustibles should be paid in foreign currencies. The US dollar is currently equal to TND 2.14, and this will negatively impact the budget.
Does this mean that subsidies may be removed next year?
The government cannot keep indefinitely subsidizing basic goods. For example, vegetable oil is being sold to citizens for TND 0.9, while its unsubsidized price reaches as high as TND 2.5 (more than a dollar).
Adjusting the prices of subsidized material is linked to how much the dollar will increase against the declining Tunisian dinar. The budget law for 2016 is based on expectations that the exchange rate will be TND 1.97 for one USD. However, the unprecedented increase of the US dollar up to more than TND 2 and the volatility of raw material prices worldwide has a direct, negative impact on financial balances, which is leading us to slightly raise the prices without compromising the purchase power of Tunisians.
Do you think that extremist groups are benefitting from smuggling products to Libya?
I honestly do not know where the products can be smuggled inside Libya after it has crossed the Tunisian border, but what I know is that Libya increasing governmental subsidies of basic goods has contributed in smuggling many Tunisian subsidized products. However, we are keen on tightening the grip on smugglers.
To counter smuggling, the government decided to establish free trade zones on the Libyan border. What are the latest?
These project studies are based on a site of about 152 hectares in Shuha in Ben Guerdan. It is expected that the first study of this area will be achieved within two years after completing studies and mobilizing necessary funds.
Another study is to be conducted within four months for a similar project on Algerian borders.
Knowing the Tunisian’s difficult economic situation due to consecutive terrorist attacks, what are the positive aspects that may help Tunisia to reduce economic damages?
Exporting olive oils and dates has greatly saved Tunisian exports in 2015 where the sales of oil exceeded $US 950 million and the sale of dates were about $US 230 million. This helped in compensating the significant decline in exporting mineral material, particularly phosphate, which is still facing difficulties because of the decline in production rates and the loss of international market shares.
Without the quantitative and qualitative exports of oils and dates, Tunisia would have suffered severely from economic recession following the two terrorist assaults on Bardo Museum on March 18, 2015 and Hotel Riu Imperial Marhaba on June 26, 2015.
