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On July 25th, 2022, exactly one year after the suspension of Tunisia’s parliament and the beginning of a political transition, Tunisia entered a new political phase with the adoption, through a referendum, of the Constitution proposed by the president, Kais Said [with 30.5 percent participation rate; 94.6 percent voted in favor]. The new Constitution officially came into effect on August 18th, introducing a more presidential regime and a bicameral legislative system. On September 15th, 2022, a new electoral law was adopted, and the next step on the presidential roadmap, announced in December 2021, will be parliamentary elections on December 17th, 2022.


Tunisia's economic performance decelerated after the 2011 revolution, resulting in a lost decade of growth, exacerbated by the COVID-19 pandemic, which hit in 2020. GDP growth declined to 1.7 percent on average between 2011 and 2019. A significant decline in productivity growth was observed as a result of excessive regulation of economic activity, reduced trade orientation, low investment, and limited innovation.

With worsening growth and job outcomes, Tunisia increasingly relied on the welfare state to meet citizens' aspirations for better livelihoods. Job creation slowed down in the post-revolution period as the economy failed to produce sufficient opportunities, particularly for university graduates and the prime working-age population. While the state sought to compensate citizens through public employment creation and large consumer and producer subsidies, it has not tackled the profound distortions holding back the economy. Markets have become increasingly concentrated, thus creating entry barriers, while the costs of doing business remain high across sectors, including cumbersome rules on investment, trade, and licenses; poor access to finance; and a growing public administration. This expanding role of the state has resulted in the rapid growth of public debt, increasing from 40.7 percent of GDP in 2010 to 84.5 percent in 2021. The COVID-19 pandemic and more recently the war in Ukraine have exacerbated socio-economic vulnerabilities. Rising commodity prices have pushed the trade deficit to widen by 61 percent in the first eight months of 2022, reaching 11.6 percent of GDP. Lower oil and gas production and increased demand for energy and agricultural products have aggravated the vulnerability of the trade balance to the vagaries of international markets.

The rapidly rising import bill has caused signs of balance of payments distress despite the resilience of external capital flows. During the year's first seven months, the account deficit deteriorated by 54 percent, reaching 8.7 billion dinars (or 6 percent of GDP). The pressure on the dinar increased, but foreign exchange reserves have remained stable. The increase in international commodity prices has created additional pressures on public finances, mainly through subsidy spending. World Bank simulations suggest that energy and food subsidies in 2022 will increase relative to the 2022 Budget Law by 2.8 and 0.4 percentage points of GDP, respectively. The increase in subsidies translates into growing pressure from public debt, which escalated between 2017 and 2021, from 66.9 to 82.4 percent of GDP. The increasing use of local funding may lead to crowding out of credit in the economy. Given the persistent difficulties in accessing international financing, the Central Bank continues to refinance treasury bond issuance, which increases liquidity.

Inflationary pressures increased significantly, mainly from global markets and higher administered prices. In August 2022, the inflation rate increased for the twelfth consecutive month to 8.6 percent (from 6.7 percent in January 2022 and 6.16 percent in August 2021). This is the highest rate since September 1991. Rising inflation pushed the Central Bank to raise its policy rate by 0.75 basis points in May 2022, the first increase since October 2020, while the adverse terms of trade had only a mild impact on economic activity through the first semester of 2022. The recovery in travel and business and the strong performance of mining and manufacturing boosted economic growth. The growth rate reached 2.8 percent in the year's first half, which could improve the unemployment rate. The latter returned close to pre-pandemic levels (15.3 percent in the second quarter of 2022 versus 15.1 percent in the second quarter of 2019).

Last Updated: Oct 20, 2022


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

*Amounts include IBRD and IDA commitments
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Susan Pleming
Building Le Boulevard, 3rd floor, Cité les Pins, Les Berges du Lac II, 1053 Tunis