Tunisia secures international support for economic recovery

 

In its efforts towards economic recovery and the consolidation of democracy, Tunisia’s government is increasing cooperation with international partners. The revolution and democratic reforms have garnered significant international goodwill, recently evidenced by the success of the country’s investment conference, Tunisia 2020, in Tunis on November 29 and 30, 2016.

Tunisia 2020

During the conference, which gathered representatives from some 40 countries, Tunisia unveiled its new development plan for the 2016-20 period. Valued at TD120bn (€51.5bn), the plan features some 100 projects to be implemented as public-private partnerships and aims to increase foreign direct investment (FDI) volumes by more than 80% over the next five years. At a press conference after the event, Prime Minister Youssef Chahed said the conference had raised some TD34bn (€14.6bn) in financial support, including TD15bn (€6.4bn) in signed agreements at the event and a further TD19bn (€8.1bn) in pledged investments.

The single biggest pledge came from Qatar, which committed $1.25bn in aid to finance new projects. Meanwhile, Saudi Arabia pledged $800m, Italy earmarked €560m, and Kuwait committed $500m in loans and aid. Turkey announced plans to deposit a $100m zero-interest loan at Tunisia’s Central Bank, while France will allow the conversion of an unspecified amount of debt into financing for new investment.

EU

The president of the European Investment Bank (EIB), Werner Hoyer, also pledged a €2.5bn loan by 2020, with the funds expected to stimulate investment and job creation. As Tunisia’s largest trading partner, the EU remains vitally important to the country. Trade between the partners totalled €20.3bn in 2015, with the EU accounting for nearly 75% of Tunisia’s exports.

Since 2011 the EU has more than doubled its financial contribution to Tunisia. According to the EU, support from the bloc for the period from 2011 to 2016 totalled €3.5bn, made up of over €1.2bn in grants, €800m in macrofinancial assistance and a €1.5bn loan from the EIB. In 2012 Tunisia was granted privileged partner status by the EU, and since October 2015 Tunisia and the EU have been negotiating a comprehensive free trade agreement aimed at deepening economic integration, generating new trade and investment opportunities, and ultimately supporting Tunisia’s domestic reforms. Tunisia is a primary beneficiary of the EU’s Southern Neighbourhood umbrella programme, which recognises progress made in democracy and human rights. It is also an important beneficiary of the European External Investment Plan, designed to energise investment in Africa and in the EU Neighbourhood.

US: Another one of Tunisia’s key international partners, the US has maintained a presence in Tunis since 1797. Trade between the two countries totalled $1.15bn in 2015, according to the US Department of Commerce. Since 2011 the US has provided over $750m in foreign assistance and underwritten nearly $1bn in loan guarantees, according to the US Department of State.

From the beginning of Tunisia’s democratic transition, the two countries have worked to advance economic cooperation and development, strengthen governance, and increase security and counterterrorism cooperation. In 2015 they established the US-Tunisia Joint Economic Commission. At its first meeting in May 2016, they discussed Tunisia’s agriculture and food sectors, strengthening small and medium-sized enterprises, and expanding its ICT sector. Additionally, Tunisia is a key partner in the US’ counterterrorism efforts in North Africa. In May 2015 then-President Barack Obama named Tunisia as a major non-NATO ally. According to the US Department of State, the US has provided more than $250m in security assistance since 2011.

Tunisia 2020’s success and the support the country has received since the revolution is testament to the international community’s commitment to its democratic reforms and economic recovery. The pledged aid should help reverse a decline in FDI flows and put the country on the path towards more inclusive growth.

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Cover of The Report: Tunisia 2017

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This article is from the Country Profile chapter of The Report: Tunisia 2017. Explore other chapters from this report.