Tunisia is in the eye of the storm, according to experts

Inflation has just hit a new high that hasn’t been matched in more than 36 years. A worrying situation that worries economic experts above all for the current situation of the country’s public finances in the face of the surge in the prices of food, raw materials and fuels.

Indeed, according to data from the National Statistics Institute (INS), the consumer price index for households in Tunisia rose to 8.6% in August after 8.2% in July 2022., 8, 1% in June 2022, 7.8% in May 2022 while it was only 6.7% in January.

Since mid-2021, inflation has not stopped rising. It dropped from 4.8% in May 2021 to 6.4% in July 2021 to return to 6.2% in September 2021 before resuming its escalation in subsequent months, reaching its highest level in July 2022 for 31 years and continue its progression in August 2022 to reach a new peak of 8.6%.

Some experts and economists have commented on this rise in inflation and presented their reading of the current situation and its repercussions.

Economics expert and chairman of the board of the Financial Center for Entrepreneurs, Radhi Meddeb, noted that in Tunisia 73% of prices are free and 27% would be administered, i.e. fixed administratively and that the increase in recent months is the weighted average between the two. However, administered prices only changed by 0.5%. This means that so-called free prices rose 14.1% year-on-year for the month of August.

And to affirm it it is this level that is perceived by the consumer ..! “. And to clarify that” the increase is not uniform for all products. It was higher for food products (+ 11.9%), education products (+ 10%), etc., i.e. basic necessities that directly affect purchasing power “.

He recalled that much of this inflation is imported but that the increase in hydrocarbons and that of cereals for human consumption have not yet affected prices in Tunisia, as the state preferred to continue to take charge of them, through compensation.

For him it is obvious that the Central Bank of Tunisia will proceed to further hikes of its reference rate in the coming weeks. But estimate that ” this is necessary but strictly insufficient, beyond the economic policies of true recovery through supply “.

And to explain that a significant part of the inflation is due to the weakness of production in Tunisia.

We will not reverse the upward trend in prices without a real supply shock, a return to production: agricultural, industrial and services. The action of the BCT alone will do no good. Economic policy is at stake. “, He assured. And to add: In the absence of a supply shock, the level of inflation is set to continue to rise. The necessary repricing of subsidized products could lead to widespread increases in all prices. Can’t delay any longer. The state finances but also the too long agreement with the International Monetary Fund (IMF) make it inevitable “.

Mr. Meddeb thinks that ” this hike in current and future prices makes it difficult to reach an agreement with the trade union federation, which however is required by the IMF to move forward “.

For his part, the professor of economics and management and president of the Tunisian Institute of Directors, Moez Joudi, assured that ” Faced with this runaway inflation, the current government is unable to raise wages due to lack of resources and in the face of accumulating deficits and weakness in investment and wealth creation “.

For him, if the government increases wages, the same under these conditions, there would be a total break with the IMF and inflation would increase further in the face of an increase in the money supply that would not really correspond to the creation of wealth and an increase in the production.

An unsustainable situation in the face of popular discontent that will be felt even more in the coming weeks “He said.

The doctor of economics, professor-researcher at the University of Carthage and expert consultant, Aram Belhadj, for his part, observed that, contrary to the forecasts of some experts, inflation continues to rise. Worse still, he thinks inflation will rise further in the coming days, despite falling prices on world markets. Like Mr. Meddeb, the expert expects a key rate hike in the coming days as well as tightening restrictions on bank lending by the BCT.

Mr. Belhadj felt that ” the prices of some vital products will be raised, with or without the consent of the government “The latter will also be caught, in the coming days, between the hammer of the International Monetary Fund and the anvil of trade union pressure on the wages and compensation issue.

And to support: The days to come will therefore be more difficult than the previous ones at all levels, especially economic and social. There will be no solution to the current crisis, or even the next one, without joint efforts and the involvement of all parties in the rescue process. “.

An opinion shared by Radhi Meddeb who stated that ” Tunisia is at a historic turning point. The ship is in the heart of the cyclone. It rocks violently “.

And to remember it inflation is a cancer that devours people’s purchasing power, demolishes the competitiveness of businesses and the economy, prepares a strong devaluation, impoverishes the country ”. “In this case there are only the losers “, he hammered, explaining that” it is the responsibility of all interested parties to show the reasons for the much needed historical compromises, today before tomorrow ..! “.

The country’s current economic and financial situation is worrying. Tunisia will not be able to cope with inflation and this increase in international prices indefinitely. It is time to take radical measures, those that have long been needed and that have been delayed by populism or cowardice.

Imen NOUIRA

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