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Tunisians fear more economic hardship ahead of IMF talks

Tunis (AFP) – Every day, at the family grocery store in a Tunis market, Bilel Jani sees the reality of a bitter economic crisis that, for many, has overshadowed the latest political unrest in Tunisia.

“People here are poor,” he said, handing a meager sack of olives to a customer. “Most of our clients live hand to mouth. These days, monthly salaries don’t even cover a week.”

The tiny North African country, troubled by years of political turmoil that deepened with President Kais Saied’s takeover last July, is also mired in a deep recession.

Soaring prices and job losses have hurt families who were already struggling before the coronavirus pandemic.

Tunisian President Kais Saied arrives at a European Union and African Union summit in Brussels on February 17, 2022. SWIMMING POOL JOHN THYS/AFP

This week, Tunisia started preliminary talks with the International Monetary Fund on a bailout.

Such a deal would likely mean cuts to public sector subsidies and wages, which many believe would lead to more suffering for the most vulnerable.

It could fuel the same kind of grievances that sparked a revolution a decade ago and brought down autocrat Zine El Abidine Ben Ali after 23 years in power.

Since then, the economic crisis has pushed tens of thousands of Tunisians to seek a better life abroad.

Cradle of the Arab Spring

At the Halfaouine market on a winding street near the center of Tunis, Jani’s customers are already feeling the pain.

A sculpture of Mohamed Bouazizi's cart stands in the town of Sidi Bouzid in central Tunisia, the birthplace of Tunisia's 2011 revolution
A sculpture of Mohamed Bouazizi’s cart stands in the town of Sidi Bouzid in central Tunisia, the birthplace of Tunisia’s 2011 revolution Fethi Belaid AFP/File

“Before, people bought by the kilogram,” he said. “Now they just buy the absolute necessities.”

His client Delila Dridi said life was a struggle for her Education Ministry salary.

“I earn 1,000 dinars ($348, 305 euros) a month and I had 100 or 60 dinars left at the end,” she said. “Now I have to borrow to get to the end of the month.”

When asked when things started to go downhill, she replied “since Zine left”.

Ben Ali had ruled with an iron fist. But in late 2010, in the neglected town of Sidi Bouzid, vegetable seller Mohamed Bouazizi set himself on fire in desperate protest against police harassment.

This sparked a revolt that forced Ben Ali into exile and sparked the Arab Spring uprisings in the region.

A demonstration called by the Islamist-inspired party Ennahdha against recent decrees by President Kais Saied, in the capital Tunis on February 13, 2022
A demonstration called by the Islamist-inspired party Ennahdha against recent decrees by President Kais Saied, in the capital Tunis on February 13, 2022 ANIS MILI AFP/Dossier

But rather than tackle corruption and structural economic problems, the dysfunctional democracy that followed was torn apart by an ideological clash between Islamists and secularists.

Successive governments have mounted hiring drives to ease social unrest, inadvertently tripling the wage cost of Tunisia’s public sector, one of the most bloated in the world.

Fight against inflation

Little has been done to help the poorest regions in a country with large wealth disparities, said Romdhane Ben Amor of the Tunisian Forum for Economic and Social Rights.

Then, in 2020, the pandemic hit and Tunisia’s economy shrank by more than 9% as public debt exploded.

The small North African country, rocked by years of political turmoil that worsened with President Kais Saied's takeover last July, is also mired in a deep recession.
The small North African country, rocked by years of political turmoil that worsened with President Kais Saied’s takeover last July, is also mired in a deep recession. FETHI BELAID AFP

The International Crisis Group think tank warned last month that the debt-ridden Treasury “can barely cover salaries owed to public sector workers or meet external loan repayment commitments”.

With the government and private banks reluctant to lend to the private sector, around 80,000 small and medium enterprises have either declared bankruptcy or left the country since the start of 2020.

“The economy is in a deep recession, debt is at unprecedented levels and unemployment is at 18%,” and much higher among young people, said economist Ezzedine Saidane.

Inflation has remained stubbornly high, reaching 6.6% in December on an annualized basis.

These rising costs have resulted in misery for people who depend on stagnant wages, pushing much of Tunisia’s once-large middle class into poverty.

“I stopped buying a lot of stuff because my salary doesn’t cover it,” Dridi said.

“Waiting for a Spark”

All of this poses an imminent challenge to President Saied, who last year sacked the government and grabbed sweeping powers, vowing to “clean up” state institutions and rewrite the constitution.

Debt-stricken Tunisia has started preliminary talks with the International Monetary Fund on a bailout
Debt-stricken Tunisia has started preliminary talks with the International Monetary Fund on a bailout SAUL LOEB AFP/File

Ben Amor worries that Saied, a professor of austere constitutional law, “has no economic or social program”.

“He doesn’t meet any economic experts. He meets legal experts. But our problem is not legal,” he said. “There is a crisis, but it is an economic and social crisis.”

Ben Amor said recourse to the IMF, with the austerity that would likely ensue, should be Tunisia’s last option after domestic solutions have been exhausted.

For example, the country’s large informal sector and businesses that have benefited from the pandemic all represent untapped sources of tax revenue, he said.

A Tunisian man is arrested following clashes with police during protests against President Kais Saied, on the 11th anniversary of the Tunisian revolution
A Tunisian is arrested following clashes with police during protests against President Kais Saied, on the 11th anniversary of the Tunisian revolution FETHI BELAID AFP/Dossier

“The IMF sees citizens and their needs as numbers: the public wage bill, interest rates, debt ratios, etc. “, did he declare. “He doesn’t see them as people who have needs – to eat, to have health care, to travel.”

Ben Amor thinks the economic crisis could easily trigger major social unrest.

“It feels like the calm before the storm,” he said. “Society is waiting for a spark. Just like it happened in 2010.”