Tunisia
- Total external debt: $17.8 billion (World Bank, 2005)
- Total external debt payments: $2 078 million (World Bank, 2005).
- Population: 47.1 million (World Bank, 2005)
- Percentage of adults who can read and write: 74.3% (HDR 2005)
- Average life expectancy: 73.5 years (HDR 2005)
- HIV prevalence: 0.1% (HDR 05)
- Total health spending: 2.8% of GDP (HDR 04)
- Total spending on debt service payments: 7.24% of GDP
- Annual GDP: $28.7 billion (HDR 2005)
DROP THE DEBT FAST
Tunisia is the focus of the Drop the Debt Fast on Monday 12 May.
Background information
At the centre of North Africa, close to vital shipping routes, Tunisia has historically been important in the Mediterranean region. Its people have had political stability, though limited political freedom, since gaining independence from France in the 1950s. Tunisia has seen some economic growth and fall in poverty over the decades, but still faces challenges such as high unemployment and lack of resources for social services such as health and education.
Political history
Tunisia won independence from France in 1956 and was ruled for the next three decades by Habib Bourguiba, whose secular policies included the advancement of women’s rights beyond that of most other Arab countries. Over his 30 years of power, Bourguiba became increasingly intolerant of opposition. In 1987 he was deposed and his former security chief, Zine El Abidine Ben Ali took over. Ben Ali has since won elections with overwhelming majorities – bringing criticism from the international community and human rights activists, especially for the repression of dissent and for changes to the constitution that have allowed Ben Ali to run for re-election in 2004 and again in 2009.
Where has the debt come from?
Tunisia may not be as poor as some of its neighbours, but it is still in the poorest half of countries globally, ranked by per capita income, and has an external debt of $17.8 billion.
In the 1960s and 1970s Tunisia was lent considerable amounts by the United States and European and Arab countries. Tunisia also has a high proportion of private debt – some $6.3 billion of its external debt owed to private creditors. Private debt is less concessional than public debt and so more expensive for a country to finance.
In the mid-1980s, Tunisia’s debt burden sparked a foreign exchange crisis. This was followed by structural adjustment policies and the re-orientation towards a market economy. After decades of state intervention, Tunisia has been pursuing economic liberalisation policies since the late 1980s, including working towards the creation of a free trade area between Tunisia and the EU for manufacturing goods by 2008. But the reduction in tariffs that Tunisia has had to enforce as part of this agreement has hurt employment in some sectors and intensified the competition faced by domestic producers. Officially, 15% of the Tunisian work force is unemployed, but the real numbers of jobless or underemployed are higher.
Debt cancellation status
Tunisia is officially classed as a lower-middle income country by the World Bank. It is therefore not eligible for the Heavily Indebted Poor Countries initiative or the Multilateral Debt Relief Initiative. Nor is it eligible for additional debt relief from the UK or other bilateral donors.
The New Economics Foundation calculates that Tunisia requires 53% debt cancellation in order for the government to meet the basic needs of its citizens, such as health, education and infrastructure, without taxing those living below an ethical poverty line of $3 a day.
Further information:
BBC country profile, New Internationalist, World Bank country brief
Last updated: April 2008
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