Economy of Tunisia
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Overview
Tunisia is in the process of economic reform and liberalization after decades of heavy state direction and participation in the economy. Prudent economic and fiscal planning have resulted in moderate sustained growth for over a decade. Tunisia's economic growth historically has depended on oil, phosphates, agriculture, and tourism. The government's economic policies had limited success during the early years of independence. During the 1960s, a drive for collectivization caused unrest, and farm production fell sharply. Higher prices for phosphates and oil and growing revenues from tourism stimulated growth in the 1970s, but an emphasis on protectionism and import substitution led to inefficiencies. Tunisia received considerable economic assistance during this period from the United States and European and Arab countries and is one of the few developing countries in the region to have moved into the "middle income" category.
As a result of an overvalued dinar and a growing foreign debt sparked a foreign exchange crisis in the mid-1980s. In 1986, the government launched a structural adjustment program to liberalize prices, reduce tariffs, and reorient Tunisia toward a market economy.
Tunisia's economic reform program has been lauded as a model by international financial institutions. The government has liberalized prices, reduced tariffs, lowered debt-service-to-exports and debt-to-GDP ratios, and extended the average maturity of its $10 billion foreign debt. Structural adjustment brought additional lending from the World Bank and other Western creditors. In 1990, Tunisia acceded to the General Agreement on Tariffs and Trade (GATT) and is a member of the World Trade Organization (WTO).
In 1996 Tunisia entered into an "Association Agreement" with the European Union (EU) which removes tariff and other trade barriers on most goods by 2008. In conjunction with the Association Agreement, the EU is assisting the Tunisian government's Mise A Niveau (upgrading) program to enhance the productivity of Tunisian businesses and prepare for competition in the global marketplace.
The government has totally or partially privatized about 160 state-owned enterprises since the privatization program was launched in 1987. Although the program is supported by the GATT, the government has had to move carefully to avoid mass firings. Unemployment continues to plague Tunisia's economy and is aggravated by a rapidly growing work force. An estimated 55% of the population is under the age of 25. Officially, 15% of the Tunisian work force is unemployed, but the real numbers of jobless or underemployed are higher.
In 1992, Tunisia reentered the private international capital market for the first time in 6 years, securing a $10-million line of credit for balance-of-payments support. In January 2003 Standard and Poor's affirmed its investment grade credit ratings for Tunisia. The World Economic Forum 2002-03 ranked Tunisia 34th in the Global Competitiveness Index Ratings (two places behind South Africa, the continent's leader). In April 2002, Tunisia's first dollar-denominated sovereign bond issue since 1997 raised $458 million, with maturity in 2012.
The stock exchange is under the control of the state-run Financial Market Council and lists nearly 50 companies. The government offers substantial tax incentives to encourage companies to join the exchange, but expansion is still slow.
The Tunisian government adopted a unified investment code in 1993 to attract foreign capital. More than 1,600 export-oriented joint venture firms operate in Tunisia to take advantage of relatively low labor costs and preferential access to nearby European markets. Economic links are closest with European countries, which dominate Tunisia's trade. Tunisia's currency, the dinar, is not traded outside Tunisia. However, partial convertibility exists for bonafide commercial and investment transaction. Certain restrictions still limit operations carried out by Tunisian residents.
Economic data
GDP: purchasing power parity - $68.23 billion (2003 est.)
GDP - real growth rate: 5.1% (2003 est.)
GDP - per capita: purchasing power parity - $6,900 (2003 est.)
GDP - composition by sector:
agriculture: 13.9%
industry: 32.2%
services: 53.9% (2003 est.)
Population below poverty line: 7.6% (2001 est.)
Household income or consumption by percentage share:
lowest 10%: 2.3%
highest 10%: 31.8% (1995)
Inflation rate (consumer prices): 2.7% (2003 est.)
Labor force: 3.461 million (2003 est.)
note: shortage of skilled labor
Labor force - by occupation: services 55%, industry 23%, agriculture 22% (1995 est.)
Unemployment rate: 14.3% (2003 est.)
Budget:
revenues: $6.101 billion
expenditures: $6.855 billion, including capital expenditures of $1.6 billion (2003 est.)
Industries: petroleum, mining (particularly phosphate and iron ore), tourism, textiles, footwear, food, beverages
Industrial production growth rate: -0.1% (2003 est.)
Electricity
- Production: 10.48 billion kWh (2001)
- Production by source:
- fossil fuel: 99.5%
- hydro: 0.5%
- nuclear: 0%
- other: 0% (1998)
- Consumption: 9.748 billion kWh (2001)
- Exports: 0 kWh (2001)
- Imports: 1 million kWh (2001)
Agriculture
Agriculture - products: olives, grain, dairy products, tomatoes, citrus fruit, beef, sugar beets, dates, almonds
Exports and imports
Exports: $8.035 billion f.o.b. (2003 est.)
- Exports - commodities: textiles, mechanical goods, phosphates and chemicals, agricultural products, hydrocarbons
- Exports - partners: France 32.6%, Italy 21.9%, Germany 10.7%, Spain 4.7%, Libya 4.4% (2003)
Imports: $10.3 billion f.o.b. (2003 est.)
- Imports - commodities: machinery and equipment, hydrocarbons, chemicals, fuel, food
- Imports - partners: France 26.1%, Italy 19.8%, Germany 8.9%, Spain 5.2% (2003)
Debt - external: $14.39 billion (2003 est.)
Economic aid - recipient: $378 million (2001)
Currency
Currency: 1 Tunisian dinar (TD) = 1,000 millimes
Exchange rates: Tunisian dinars (TD) per US$1 - 1.2455 (January 2000), 1.2546 (December 1999), 1.1387 (1998), 1.1059 (1997), 0.9734 (1996), 0.9458 (1995)
Fiscal year: calendar year