Tunisia: Government & Tourists: Driving Forces in Economic Hardships

In a move to defuse discontent over economic hardships, Tunisia raised the minimum wage for industrial and farm workers as well as pensions for hundreds of thousands of private-sector retirees by 6.5%.

Prime Minister Chahad’s decision came in the face of pressure from Tunisia’s foreign creditors for a freeze in wages in the public sector, which includes some industrial workers, to reduce its large budget deficit.

The IMF has pushed Tunisia to freeze public-sector wages -- the bill for which doubled to about USD 5.5B in 2018 from 2010 -- to reduce them from about 15.5% of GDP now to 12.5% in 2020. They also want Tunis to trim spending to help reduce its heavy budget deficit, though such steps risk adding fuel to public anger over joblessness and poverty. 

The rise was due mainly to resumption of tourism from Europe (particularly from the UK and France) and an increase in those from Russia and China. The boom led to an increase in revenue from tourism that, as of end-April, had surpassed USD 330M, 35% higher than the same period of the previous year.

This growth could however be slowed as parliamentary and presidential elections approach in October and November this year. Tunisia's nearly four-year long state of emergency was yet again extended for a month until June 4, drawing a fresh cloud of uncertainty over the political readiness of the country ahead of elections.

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