Tunisia’s public debt level remained relatively low until the early 2000s with an average debt to GDP ratio of 48% per year by 2002. The ratio continued to decrease and amounted to 39% in 2010. This was mainly due to prudent debt management policy, as Tunisia was never part of HIPC and has never announced receiving any debt cancellation from China. Specifically, Tunisia undertook a structural adjustment program and liberalized its economy, which brought lending from the World Bank and other creditors. During this period, Tunisia developed its access to international capital market and established domestic government fixed income instruments, which enabled it to reduce dependency on external debt. Furthermore, Tunisia’s Five-Year Development Plan detailed a commitment to keep the total amount of national debt under 60-65 percent of its GDP – to secure its fiscal sustainability.
Key Projections for 2022
Debt to GDP Ratio
However, since the Arab Spring and 2011, Tunisia’s debt burden has significantly increased from 43% to 80% in 2019. Prior to this, the economy was growing at an average of 4.3% a year. The post-Arab Spring period in Tunisia led to a sharp decline in economic development: the economic growth rate was estimated at -1.9% in 2011. Moreover, although its geographic location provided easier access to the Southern Mediterranean, the Arab World and the European market, the recession in Europe after 2008 global financial crisis further deteriorated the economy, as the EU accounted for nearly 80% of Tunisia’s exports, making it difficult to diversity exports. The government of Tunisia made efforts to boost economic growth thereafter, but the progress was slow. Specifically, successive terrorist attacks against the tourism sector and worker strikes in the phosphate sector, key sources of foreign currency income, caused a depreciation of the Tunisian Dinar, which further decreased the government revenues. Taken together, the fiscal deficit widened from 0.6% of GDP in 2010 to 6% of GDP in 2017, bringing into question Tunisia’s ability to repay debt.
However, Tunisia provides a relatively comprehensive range of government data, including budget, fiscal information and debt documents. Tunisia has established a debt management office, passed the Right to Access Information Law, and signed to the Open Government Partnership, leaving it top range amongst analyzed countries in the Debt Transparency Index.
Revenue and Budget Balance
Projected debt service to China vs Other creditors
The number of Chinese loans to Tunisia is relatively small with the total amount of US$131 million based on the data from China Africa Research Initiative. Little data is available, however it indicates China may account for less than 1% of Tunisia’s current external loan portfolio. There were only seven loan projects recorded during the period between 2000 and 2009 and most were allocated to the communication sector. One loan was provided for the construction of Tunisian National Railways in 2009, which accounted for US$80 million.
However, since the launch of the Belt and Road Initiative in 2013, Tunisia and China have increased cooperation. In 2018, Tunisia became one of the 44 African countries to sign an MOU on the BRI with China. Thereafter in 2019, China granted the government of Tunisia two donations worth 272 million RMB (approx. US$41 million) under two cooperation agreements between the two countries. China helped the construction of the Sfax hospital starting in 2016 and in 2019 China further provided US$70 million in grants to expand a new university hospital. The countries also have cooperation in youth exchange and scientific research such as AI development and ITC enhancement.
China Debt : GDP Ratio (%)
External Debt Stock to China vs. Other Countries (USD millions)
The Jubilee debt campaign predicts a debt crisis in Tunisia in 2020, with debt payments reducing the capacity to mobilize domestic resources and highlighting vulnerabilities in Tunisia’s ability to fulfil debt obligations. The IMF does not assess Tunisia’s debt sustainability as it is classified as a middle-income country. In terms of its creditworthiness, Fitch downgraded Tunisia’s credit rating to ‘B’ with a stable outlook on May 12, 2020, which is below investment grade and highly speculative and suggests a vulnerable capacity for continued payment under the deteriorating business and economic environment. Continued access to domestic and international finance could help Tunisia to meet outstanding long-term infrastructure financing needs – for example to provide internet access to the entire population as well as improving trade and road infrastructure to more efficient levels.
and The Development Reimagined Team
Statement on use of data:
Health and Well being choices
People are doing to support their fitness
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People plan to do at work when
restictions are lifted
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Global Corona virus Impact and Implications
COVID-19 cases crossed the 15-million mark globally this week, with South Africa replacing Peru among the top five worst affected countries.