The Central Bank of Tunisia (BCT) predicted a sharp economic contraction in the country during Q2 of 2020, ranging between 10 and 12 percent, compared to a 2 percent contraction during Q1 of the same year.
The Central Bank carried out a study in cooperation with the United Nations Development Program (UNDP) on the impact of the coronavirus pandemic on the Tunisian economy.
The Bank confirmed that by the end of the year, the economic recession will lead to a 4.4 percent decline in GDP, a 4.9 percent decrease in total investment operations, an 8 percent drop for household consumption and exports, and a 9.6 percent decrease in imports.
The study noted that these are negative indicators that will have implications on social and economic stability.
The unemployment rate is predicted to increase from 15 to 21.6 percent, an increase of no less than 274.5000 unemployed citizens.
The decline in economic activity as well as state and individual revenues will lead to a decline in the annual income levels of about 475,000 Tunisians.
The Tunisian budget deficit during the first half of this year was estimated at DT3.847 billion, driven by the significant decrease in the level of state revenues, the increase in operating expenses, and the rise in the wages.
Tunisian economist Izz Saidan stressed that overcoming the economic downturn requires large financial resources that the country can't provide now given the authorities’ inability to resort to the international financial market as a result of the continuous reduction of the credit rating since 2011.
Saidan noted that relying on local resources requires exceptional solutions, mainly represented in adopting a different monetary policy based on the Central Bank’s purchasing the entire treasury bills in Tunisian banks with a value of about DT15 billion.
The expert explained that the treasury bills will then be converted into debt that extends over 40 years with a grace period of about 10 years.
He added that this will pump about DT8 billion into local banks that will be directed to finance the local economy and support economic institutions.
Saidan said that the International Monetary Fund (IMF) was not satisfied with this financial policy that directed development and investment funds to bridge the budget deficit over the past years.
He said that this policy puts the Tunisian economy in a vicious circle, which, as he put it, postpones the economic take-off for years.
