Energy deficit accounts for 1/3 of overall volume of country's trade deficit (DG of Trade)
10/01/2019 18:55, TUNIS/Tunisia
(TAP/Semia Boukhatem) - "The energy deficit accounts for 1/3 of the overall volume of the country's trade deficit", which exceeded 19 billion dinars for the whole year 2018, said public services advisor and director general of foreign trade at the Ministry of Trade, Khaled Ben Abdallah, noting the slowing down of the pace of the non-energy deficit in recent months.

The official added in a statement to TAP that "the deterioration of the energy balance contributes up to 65% to the worsening of the deficit".

"This energy deficit, which today weighs heavily on the state budget and the balance of trade with foreign countries, is due to three factors.

First, the rise of prices internationally by more than 40%, to over 80 dollars / barrel in October 2018.

Second, the increase in national consumption of energy, especially with the improvement of the standard of living of citizens and the spread of the use of air-heating equipment and third, the decrease in local production by 40%, compared to 2010, because of the fall of prospecting activities.

Decrease in phosphate production: a shortfall of 3 billion dinars (2010-2018)

The DG for Foreign Trade pointed out that the decline in production of phosphate and derivatives (-5.7%), during the period 2010-2018 generated a shortfall for Tunisia of the order of $ 1 billion, i.e. the equivalent of nearly 3 billion dinars.

Likewise, he said energy spending has caused Tunisia’s foreign exchange reserves to drop by 25 days of import in 2016, 30 days of import in 2017 and 35 days of import until the first 10 months of 2018.

Ben Abdallah explained this deficit, too, by the depreciation of the dinar. In fact, the situation of the trade balance at constant prices, at the end of November 2018, reveals a rise in volume of exports by 3.7% and imports by 1.1%.

Taking into account the evolution of prices, exports will have increased at current prices by 15.6% and imports by 18.9%, due to the depreciation of the dinar, compared to the main foreign currencies (Euro and US dollar).

According to statistics, published by the Central Bank of Tunisia, the dinar depreciated by 20.82%, compared to the US dollar, on January 9, 2019, in comparison with the same period of 2018, and 16.6% against the euro during the same period.

In addition, the official explained the worsening of the trade deficit by the rise of food imports by more than 17%, because of the increase of grain purchases by 33.7% and the imports of consumer products by 13%, mainly due to higher imports of textiles and clothing (14.9%), household appliances (17.6%) and pharmaceuticals (11.6%).

However, Ben Abdallah said that food and consumer products account for only about 6 percent of the trade deficit, while building materials account for 22 percent, energy 32 percent, and raw materials and semi-manufactures 40%.

70% of the deficit is due to our trade with China, Italy, Turkey, Algeria and Russia

"With regard to the geographical distribution of Tunisia’s trade, the country has a deficit, especially with respect to China (28% of the country's deficit), Italy (15%), Turkey (11%), Algeria (9%) and Russia (7%).

In fact, 70% of our deficit is due to our unbalanced trade with these 5 countries, "he said.

"But it must be made clear that the deficit with Algeria results essentially from the import of energy. As for the deficit recorded with Italy, it is linked to the import of energy equipment, raw materials and energy, while the deficit
registered with Russia is due to the import of raw materials and energy".

"With regard to China and Turkey, our deficit comes from importing consumer products, raw materials and equipment."

"To remedy this situation, the Trade Department has put in place a series of tariff and non-tariff measures," said the official.

As far as tariff measures are concerned, "they essentially concern the increase in the customs duties applied on the import of a number of products, especially those for consumption, including products traded with Turkey, and this in the context of the 2018 Finance Act ".

Ben Abdallah reiterated that the products concerned by all of these measures, which are essentially either food or consumption (such as cosmetics), are currently the subject of two draft laws submitted for consideration by the House of People’s Representatives (HPR).

These are the Food Safety Bill and the Industrial Products Safety Bill, the implementation of which will ensure market surveillance.

"Pending the adoption of these two laws, the Ministry of Trade had decided from November 28, 2018 the submission of the import of certain non-essential consumer products to the regime of the specifications.

Therefore, the operators must deposit an authorization to be able to carry out an import activity, which will make it possible to better organize this sector and to ensure the traceability of the distribution of these products, able to guarantee the health and safety of consumers, "said the managing director.

5% increase in imports of non-bank financed products

The Director General of Foreign Trade also talked about the measure launched in early 2018, in co-ordination with the Central Bank of Tunisia (BCT), on the restriction of bank financing of the import of 100 products.

"Unfortunately, a year after the application of this measure, we noticed that the import of these products has increased by 5%.

This is explained, on the one hand, by the currency effect (the depreciation of the dinar), and on the other hand by a number of diversion practices.

Some importers receive credits through other accounts and other banks, or declare false general product nomenclatures," he pointed out.

"That's why we are now co-ordinating with the BCT to refine this mechanism to avoid this kind of diversion," he said, adding that this list can be revised at any time, while always taking care not to introduce inputs, semi-products, or intermediate products for production.

The Director General of Foreign Trade concluded, "We are forced to strike a balance between import control and trade facilitation.

We always strive to respect the standards and indicators considered by rating agencies.

If we adopt rigid measures and strict control, we may be sanctioned by these agencies and also, in many rankings, such as that of Doing Business which can have a direct impact on the country’s attractiveness.

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