Tunisia’s trade deficit worsened by a record 56% in the first half of 2022, reaching 8.1% of GDP, while the budget deficit, exacerbated by rising energy and food subsidies, is expected to reach 9.1% in 2022, up from 7.4% in 2021, according to the latest World Bank report.
Inflation in the country jumped from 6.7% in January 2022 to 8.1% in June 2022, leading the country’s central bank to raise its key interest rate, the first increase since 2020, the WB said in its “Tunisia Economic Monitor”.
The slow economic revival after COVID-19 and the delay in carrying out key reforms, including subsidies, risks further straining Tunisia’s public finances and widening budget and trade deficits, the WB document cautions.
“Just as its economy was beginning to recover from the COVID-19 crisis, Tunisia faced the dual challenge of rising commodity prices and the war in Ukraine, which put enormous pressure on global wheat and energy supplies,” said Alexandre Arrobbio, the World Bank’s country director for Tunisia.
“At the end of June, the World Bank provided a $130 million loan to Tunisia to help mitigate the impact of the war in Ukraine on food security. This will allow the government to finance grain purchases while initiating the announced reforms,” added Mr Arrobbio.
Rising global commodity and manufacturing prices have exacerbated existing vulnerabilities in the Tunisian economy in the early months of 2022. Since President Kais Saied came to power in 2019, the country’s socio-economic and political situation has gone from bad to worse.
TunisianMonitorOnline
