Tunisia: New structural reforms needed to revive growth and job creation (OECD)
29/03/2018 16:38, TUNIS/Tunisia

(TAP)- The first-ever Organisation for Economic Co-operation and Development (OECD) Economic Survey of Tunisia was presented Thursday in Tunis. It projects growth approaching 3% in 2018 and 3.5% in 2019.

The survey says "expansion will be driven by business investment which is expected to benefit from simplified procedures from the new investment law, and resurgent exports which will get a boost from the recovery in European markets."

It also highlights the significant strides made after the Revolution, "including increased participation in political processes, new freedoms of expression and association, a reduction in poverty rates and solid participation in global value chains."

The Survey points out, however, "the substantial challenges posed by weak job creation, high unemployment and unsustainable public finances."

Presenting the survey, OECD Acting Chief Economist Alvaro Pereira said "the Tunisian economy has shown great resilience to both internal and external challenges.”

“Reinforcing today’s economic recovery will require a quicker pace of reforms, with priority given to actions to improve the business environment. Job creation and regional development will be the keys to making the economy more efficient and more inclusive,” Pereira said.

Returning public debt to a more sustainable path will require a combination of gradual fiscal stabilisation and structural reforms capable of sustaining stronger growth, the survey said. As Tunisia’s tax-to-GDP ratio is already high, fiscal consolidation should focus on reducing public spending – including salaries and pension costs - over a medium-term horizon.

Key recommendations of the survey to improve macroeconomic policies consist in gradually reducing public sector employment by maintaining the rule of partial replacement of persons leaving for retirement, gradually increasing the legal age of retirement and undertaking reforms to guarantee the financial sustainability of the pension regimes.

The survey also underlines the importance of restoring tax justice by facilitating the cross-check of information and increasing tax inspections in order to better combat tax evasion and fraud.

Recommendations likewise underline the need to carry out "spending reviews on the utility of public programmes, including infrastructure projects, in order to prioritise public spending and accompany fiscal adjustment with structural reforms to set the ratio of

government debt to GDP on a downward trend over the medium-term."

In a bid to revive investment, Tunisia needs to speed up the process for reducing the number of permissions to operate as well as administrative authorisations, licences and permits, simplify administrative and customs procedures for goods entering and exiting the country and improve the management of port infrastructures and the governance of public enterprises.

OECD Economic Survey of Tunisia also urges the country to ensure that systems for education, learning and training respond to the requirements of businesses, the purpose being to reduce inequalities in the labour market and across regions, diversify the funding sources for social security and encourage the recruitment of women. There is also need to speed up the implementation of the financial inclusion strategy and modernise regional structures and institutions to take better advantage of investment opportunities and help investors in the regions.

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