Overview

  • Political-economy context:

    Tunisia remains a country of contrasts; while important progress has been made on completing the political transition to an open and democratic system of governance, making the country a unique example in the Middle East and North Africa (MNA) region, economic transition has not kept pace. Internal constraints, notably the fragmentation of the political party system and the related difficulty in reaching consensus on the key economic reforms, have combined with external constraints, mainly the conflict in Libya and the continued threat of terrorism, to slow down economic recovery and to generate growing social dissatisfaction with the lack of employment opportunities.

    Youth and women have been particularly affected by the lack of economic opportunity: Tunisia is one of the few countries where a higher level of education decreases employability, in particular for women. Youth and women, in inland areas, are affected to the greatest degree, and the resulting growing outward migration of youth from these regions poses a growing threat to Tunisia’s long term economic competitiveness.

    Tunisia has continued to make progress in establishing a democratic governance system. The model of consensus-driven politics based on the ‘Pact de Carthage’ (2016), has created a greater degree of political stability and has allowed for gradual progress on implementation of the 2014 Constitution. Local elections are scheduled for May 2018, constituting a further significant step in the political transition process.   

    Macro-economic context:

    Tunisia’s growth performance in the post-Revolution period remains weak despite a modest acceleration in 2017. The political transition, recurrent social tensions, domestic security shocks, the political and security situation in the Middle East and North Africa (including in neighboring Libya), and delays in implementing the needed reforms have negatively affected the Tunisian economy. Economic growth averaged 1.5 percent post-Revolution compared to 4.5 percent in the five years before the Revolution. The economy grew by 1.9 percent in 2017 compared to 1.0 percent in 2016 and 1.1 percent in 2015. 

    Growth in 2017 was driven mainly by agriculture (+2.5 percent) and services (+4.1 percent), while industrial output and non-manufacturing industries (phosphate, oil and gas) have not fully recovered despite the depreciation of the Dinar, due to social movements in mining regions, low oil prices and reduced investment in prospecting. Moreover, the contribution of investment, exports and productivity to growth are significantly below their pre-Revolution levels.

    Unemployment is high, particularly for youth and women, and in the interior regions, given limited progress towards greater job creation, one of the chief demands of the 2011 revolution. Unemployment has declined from its peak of 19 percent in 2011, right after the revolution, to 15.5 percent in 2017, but remains above pre-Revolution levels (13 percent in 2010).

    This is despite a low labor force participation of around 50 percent, mainly due to the very weak participation of women (27 percent compared to 69 percent for men). This poor performance is driven by weak job creation in the post-revolution period. Following net job destruction in 2015 mostly stemming from the impact on tourism of the two terrorist attacks (-11,700 jobs), job creation picked up in 2016 and 2017 with a modest net job creation of 34,700 and 45,500 jobs respectively, while in comparison the working-age population (and the active population) increased by 80,000 individuals yearly on average (48,000) in 2016-17.

    Tunisia faces large fiscal and external deficits and high debt. The fiscal deficit reached 6.1 percent of GDP in 2017, 1 percentage point of GDP above the initial budget, due mainly to higher wage bill spending. The current account deficit reached a record 10 percent of GDP in 2017 as export growth remained low compared to import growth, despite a gradual depreciation of the Dinar. Consequently, public and external debt reached respectively 73 and 80 percent of GDP (compared to 40 and 52 percent of GDP in 2010). With a widening current account deficit, depressed foreign direct investment (FDI – 1.8 percent of GDP in 2017 against 4 percent of GDP on average in 2008-10) and the large Central Bank interventions in the forex market, gross international reserves have continued to decrease, reaching 3.1 months of import by end-2017 (US$ 5.7 billion) and dropped below 90 days in February 2018.

    Poverty context:

    Tunisia has in place an unconditional cash transfer program providing a social safety net (SSN) for vulnerable households which represent approximately eight percent of the population. 28 percent of the population also receives health care insurance cards through this program for subsidized services. Eligibility is based on a combination of categorical criteria and a variation of community-based targeting, determined by social worker interviews and local committees. However, targeting, information and monitoring of these programs is considered relatively weak. In addition, a large share of the working age population is either idle, unemployed, or working in low-quality jobs. In 2014, around one third of the youth population were categorized as Not in Employment, Education or Training (NEET).

    Last Updated: Apr 18, 2018

  • The Performance and Learning Review for Tunisia (PLR) reviews the implementation progress to date of the Country Partnership Framework approved on April 19, 2016. The PLR was conducted jointly by the International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Corporation (MIGA) between November 2017 and April 2018.

    The PLR was scheduled to: i) extend the implementation period of the Country Partnership Framework (CPF) by one additional year; ii) program IBRD lending resources for FY 2019-FY 2021 that had not been determined at the time of Board presentation of the CPF; and, iii) reflect the changing political and socio-economic situation in Tunisia.

    The reasons for extending the CPF implementation period are related to the political context, notably the Presidential and Parliamentary elections scheduled for 2019, the need to reflect the government’s medium term economic program, which is to be implemented through CY 2020, the slower than expected progress in Tunisia’s economic transition process, and the related need to give more time for the country to achieve the objectives set out in the original CPF.  

    Last Updated: Apr 18, 2018

  • The Tunisia Urban Development and Local Governance Project aims at helping to strengthen local governments’ performance in delivering municipal infrastructure and improving access to services in targeted disadvantaged neighborhoods. This project has increased the proficiency of local governments to meet high performance assessment levels. More than 22,510 people have so far benefited from improved municipal infrastructure.
     
    The Social Protection Reform Support Project has strengthened institutional capacity to design social protection reforms and improve targeting of safety net programs. The household information has increased from 2,000 (as of August 2017) to 70,000 (as of February 2018). The project’s end target is 400,000 of the 900,000 that the government plans to cover.
     
    The Road Transport Corridors Project will reduce transportation costs and times and improve road safety on select road corridors between lagging regions and more developed areas in the territory of Tunisia. The project will improve 146 km of existing roads and will upgrade 17 bridges, 230 culverts, and 52 road intersections, as well improving traffic signs and installing other road safety devices.

    Last Updated: Apr 18, 2018

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LENDING

Tunisia : Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments


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Additional Resources

Country Office Contacts

Tunis, +216 71 96 71 97
Building Le Boulevard, 3rd floor, Cité les Pins, Les Berges du Lac II, 1053 Tunis
sayari@worldbank.org