Tunisia

Tunisia is a lower-middle-income country with a population of approximately 12 million as of 2024. It is in North Africa along the Mediterranean Sea, sharing borders with Algeria to the west and Libya to the southeast. The official language is Arabic, while French is widely used in business and administrative contexts.

Tunisia has a relatively diversified economy, spanning agriculture, manufacturing, and services. Key activities include olive oil and other agricultural products; manufacturing, notably automotive and aeronautics components; and services, including tourism and a growing range of professional and business services.

Tunisia’s economy continues to grow moderately, with significant differences across sectors. Real GDP grew by 2.7 percent in 2025 and by 2.4 percent year-on-year in the first half of 2026. Growth was supported by agrifood, mechanical and electrical manufacturing, and hotels-restaurants, while activity contracted in hydrocarbons, textiles, and financial services. Barriers to competition, limited access to finance, policy distortions, and low female labor force participation continue to constrain stronger growth.

External imbalances widened in 2026 amid higher energy prices linked to the conflict in the Middle East. The energy trade deficit increased by 25 percent, contributing to a widening of the current account deficit to 2.4 percent of GDP by end-July 2026, compared with 1.6 percent in 2025.

Fiscal consolidation continued in 2025, albeit at a slow pace. The fiscal deficit reached 5.3 percent of GDP, while public debt remained elevated at 82.5 percent of GDP. With limited access to external borrowing, the authorities have increasingly relied on domestic debt, including the repeated use of direct Central Bank financing of the budget. Continued reliance on domestic financing, including direct Central Bank financing, could pose risks to macroeconomic stability and crowd out credit to the private sector, weighing on private investment and ultimately limiting economic growth.

Inflation has declined substantially from its February 2023 peak of 10.4 percent, although disinflation has slowed in 2026. After reaching 4.9 percent in January 2026, inflation increased to 5.5 percent in May before easing to 5.2 percent in August. The Central Bank reduced its policy rate to 7 percent in 2025, where it has since remained.

Labor market conditions improved modestly, but significant challenges remain, particularly for women. The unemployment rate declined to 14.9 percent in the second quarter of 2026, although the improvement partly reflected changes in labor force participation rather than net job creation. Gender disparities remain pronounced: female unemployment stood at 21.6 percent, compared with 11.8 percent for men, while female labor force participation was only 27 percent, less than half the male rate of 63.3 percent.

Tunisia possesses key assets to boost economic growth and job creation. The country has a relatively educated labor force, supported by sizable public spending on education (6.7 percent of GDP), near-universal primary and secondary enrollment, and expanding coverage at the tertiary level. Furthermore, significant investments in infrastructure have enabled good access to basic infrastructure services (even though the quality has deteriorated recently). Its strategic position in the Mediterranean holds significant economic potential, including as a trading hub near one of the world’s busiest shipping lanes. Finally, sustained reforms during the last two decades of the 20th century have enabled a diversified manufacturing base and a large services sector, making Tunisia the most sophisticated economy in North Africa. Tunisia’s growth prospects will depend on reforms to address economic distortions and reduce fiscal pressures. Priority actions include making taxation and spending more efficient and equitable, improving the performance of the public administration and state-owned enterprises, and reducing barriers to business entry.

Poverty remains significant and highly uneven across Tunisia, reflecting persistent regional disparities in economic opportunities and living standards. The national poverty rate is estimated at about 16 percent, with substantially higher poverty in the Northwest and Center-West. Economic activity and private investment remain concentrated in coastal areas, while interior regions face fewer employment opportunities and more limited access to infrastructure and quality services.

The Country Partnership Framework (CPF) for Tunisia for FY2023–2027 outlines the World Bank's strategy in the country, which was established in June 2023. This CPF aligns with Tunisia's national and sectoral strategies. Guided by the Systematic Country Diagnostic (SCD) and the Country Climate and Development Report (CCDR), the CPF aims to facilitate a transition to faster and more inclusive growth in Tunisia through three key objectives: Creating quality jobs in the private sector, strengthening human capital, enhancing climate resilience, and reducing carbon emissions.

The World Bank is assisting the Tunisian government in advancing these goals through various energy, water, human capital, and connectivity programs. Additionally, the CPF seeks to incorporate two cross-cutting themes—gender and social accountability, participation, and trust—across all its programs. Beyond lending, the CPF presents an ambitious agenda for advisory work and technical assistance.

Tunisia Country Partnership Framework for the period FY2023 - FY2027

The Climate Change Development Report (CCDR), which was launched in November 2023, offers a comprehensive set of measures to address significant climate challenges such as water scarcity, rising sea levels, flooding, and dependence on fossil fuel imports. This report aligns with national climate transition strategies and aims to mitigate climate impacts while promoting economic recovery and creating job opportunities. It provides actionable recommendations for both adaptation and decarbonization.

Tunisia Country Climate and Development Report

Creating more and better jobs, especially for young people and women, is a top priority for Tunisia. The World Bank is helping to modernize and digitalize ANETI, Tunisia's Public Employment Services agency, through GO4Youth. This advisory and technical assistance program is supported by the Tunisia Economic Resilience and Inclusion (TERI) Umbrella Program, in partnership with the European Union. As of September 2026, GO4Youth had helped register over 150,000 jobseekers and nearly 25,000 firms. It had also generated more than 73,000 Subsidized Wage Contracts (CIVP) under Tunisia's flagship active labor market program (ALMP) for first-time jobseekers. Modernized services for firms and jobseekers are being rolled out nationwide and now reach 48 of the 92 local employment offices, where counselors have carried out more than 23,000 diagnostic interviews. Since May 2026, ANETI has been developing a new integrated Information System (IS). The system will bring the pilot tools together into a personalized journey for jobseekers and firms. It will also underpin the national monitoring and evaluation (M&E) system for ALMPs funded by Tunisia's National Employment Fund.

Tunisia is working to protect vulnerable households and make its social protection system more efficient and better targeted. With World Bank support, the AMEN Social Program had reached over 1.48 million vulnerable individuals (more than 10 percent of the population) with monthly cash transfers and family allowances as of June 2026. Women head 51 percent of the 387,000 households receiving Permanent Cash Transfers. During the COVID-19 pandemic, the program efficiently delivered emergency cash transfers to approximately 900,000 households. Building on its adaptive social registry and strong delivery system, AMEN expanded its coverage to include family allowances for children under eighteen years old, benefiting over 600,000 children. The program has also prioritized digital transformation. This includes digitized cash transfers, automatic data exchange to simplify eligibility assessments, and deduplication of households through a robust social ID system mapped to the civil registry. A Second Additional Financing (AF2) will continue strengthening social protection delivery systems, with a focus on persons with disabilities and children from poor and low-income households. It will also reinforce the broader social protection architecture by introducing a new economic inclusion pilot and building bridges with contributory schemes, so that non-poor workers can be served by adapted, inclusive, and sustainable social security schemes.

Private sector innovation is another important source of new jobs. The Tunisia Innovative Startups and SMEs Projectsupports the government's Startup Tunisia program. It targets startups and innovative SMEs with high growth potential and strengthens the entrepreneurship financing ecosystem, including venture capital funds, incubators, accelerators, and co-working spaces. The project aims to mobilize more private investment in innovative startups and to co-invest directly in innovative SMEs alongside private sector partners. So far, the Anava fund of funds set up by the project has invested over US$20 million in 61 innovative startups, in sectors ranging from AI to fintech to biotechnology. These funds have been channeled through 10 Tunisian and regional venture capital funds that have raised matching funds from private sources, helping build a startup financing ecosystem in Tunisia. The $17 million InnovaTech co-investment fund for innovative SMEs has made eleven investments, using about 30 percent of its available funds. Combined, these two components have mobilized an additional $60 million in private financing.

Tunisia is positioning itself as a regional hub for renewable energy, and the Tunisia-Italy Electricity Integration and Renewable Energy Ecosystem projectis helping make this possible. With $268 million in World Bank financing, the ELMED interconnector will link Tunisia's power grid to the much more extensive European network through a 600-megawatt undersea cable. This will enable the renewable energy trade that is essential to the country's sustainable development and climate change strategy. The landmark project strengthens the World Bank's longstanding partnership with the Tunisian government in the energy sector. It is also supported by the Government of Italy, the European Union, the European Bank for Reconstruction and Development, the European Investment Bank, and the German Development Bank (KfW).

As Tunisia faces growing pressure on its water resources, World Bank support is helping the country use water more efficiently and improve water and sanitation services. The Irrigated Agriculture Intensification Project (PIAIT) improved the reliability and efficiency of irrigation and drainage services in public irrigation schemes in northwest Tunisia. By modernizing irrigation infrastructure, expanding drainage services, and strengthening the institutional framework, the project improved service delivery for over 2,600 farmers across more than 24,000 hectares and helped reclaim previously waterlogged land. The project closed in June 2026. The RESEau program now follows it, building on and expanding its infrastructure investments and applying the institutional lessons learned.

The Tunisia Sanitation PPP Support Project is supporting a major shift in how wastewater services are managed through the country's first large-scale sanitation public-private partnerships (PPPs). The project has brought into operation two long-term, performance-based concession contracts covering North Tunis and Southern Tunisia. These contracts bring in private sector expertise while strengthening public oversight and accountability. By mid-2026, close to 800,000 people were already benefiting from improved wastewater services under the Southern concession, and service quality has improved measurably at most treatment plants. The project has also helped establish a fully operational PPP unit within ONAS. This has built institutional capacity that reaches well beyond the project and positions Tunisia as a regional pioneer in using PPPs to deliver sanitation services.

Repeated droughts have also put Tunisia's food security under strain. The Emergency Food Security Response Project has helped the country cope with five consecutive years of drought. It streamlined wheat imports for human consumption and supported small-scale producers by providing barley for milk production and climate-resistant seeds for wheat producers. An earlier parent project helped mitigate the effects of the war in Ukraine on food security and helped the country overcome difficulties accessing financial markets amid rising global prices. The project enabled Tunisia to purchase 701,000 tons of wheat and 237,000 tons of barley, and to finance around 112,000 tons of seeds.

The Tunisia Integrated Disaster Resilience Program (ResCat), financed by the World Bank and the French Development Agency (AFD), supports the government in strengthening disaster risk management and financing. Since its launch in late 2021, the program has helped protect over 200,000 people from flooding in Bizerte, Monastir, and Nabeul. An Additional Financing of US$50 million, approved in February 2026, will extend flood protection to Tunis, Gabès, and Djerba. Early warning systems are being implemented in three pilot areas (Kébili, Ghardimaou, and Greater Tunis) to improve preparedness and response. A disaster risk financing strategy is being finalized, and a new actuarial model has been developed to support natural catastrophe insurance. A decree to establish a permanent disaster resilience structure has been finalized and submitted for approval, aiming to strengthen Tunisia's risk governance.

Tunisia Growth and Jobs Report (CGJR)

The recently finalized Tunisia Growth and Jobs Report (TGJR) highlights the need to maintain fiscal sustainability and facilitate competition to boost long-term growth and jobs. Furthermore, there is a need to diversify the sovereign financing mix and rebalance taxation and public sector employment. Given elevated debt levels, the government should engage in revenue and expenditure reforms to ensure fiscal sustainability and manage fiscal risks. The World Bank is already providing technical assistance in debt management.