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Tunisia: Tunisia Economy Profile 2012

2012/04/05

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Tunisia Economy Profile 2012

 
 
Despite increasing trade with the EU, Tunisia’s economy escaped the worst of the global crisis due to a low level of external liabilities. The decline of the Tunisian dinar against the euro helped to stabilise the trade market at the start of the recession. GDP growth slowed down to 3% in 2009 from 4.6% in 2008. In 2009 foreign direct investment reached TD2.38bn (€1.26bn), with oil and gas receiving TD1.38bn (€732.5m), while TD657.6m (€349m) was spent on manufacturing. Unemployment is officially at 14.2%, although it is estimated to rise among among young graduates. The 2010 budget includes stimulus funds to aid job creation and income growth, building on a TD730m (€387.5) stimulus package in 2009. Government subsidies for hydrocarbons, convenience goods and transportation have also been increased in the 2010 budget to neutralise a 20% drop in aggregate demand for manufactured goods. The Direction Générale de la Privatisation oversees the privatisation of state-owned enterprises – as of 2010, there are 11 companies left on its list: five industrial, five services and an agribusiness. The EU continues to serve as the dominant trade partner, with France playing a prominent role, but Germany is becoming increasingly important – bilateral trade with Tunisia reached €2.35bn in 2009.
 
 
 

Recent Economic Developments and Prospects


In 2009, growth estimates for the Tunisian economy were reviewed to a lower rate of 3.1% (down from 4.6% in 2008), a satisfactory rate given the difficult international context, marked at the end of 2008 by the first consequences of the financial crisis and a sharp decline in the national production of the manufacturing industries (-6.0%). The relatively good performance of the Tunisian economy is mainly explained by an increase in agricultural and fishing production (+6.0%) thanks to good annual rainfall, and by greater production in the non-manufacturing mining and quarrying industries (+5.3%), including mining (+6.7%) and oil (+13.0%). This growth rate should pick up again thanks to the improvement of the international environment, marked at the end of 2009 by the resurgence of indicators confirming the recovery of economic activity in most industrialised countries.
Tunisian growth is thus projected to recover its more usual 4% rate in 2010, and 4.5% in 2011. Lower external demand, European in particular, slowed down the growth of the added value of the manufacturing industries by about 6.0%, whereas in 2008 it had grown by 4.5%. This decline mostly affected the textile, clothing and leather industries (-13%), due to the fall in European consumers’ purchasing power; the mechanical and electricity industries (-11%), due to the fall in motor car sales worldwide; and the chemical industries (-8%).
The economy remains largely twofold, with on the one hand a dynamic, often foreign-owned offshore export sector involved in globalization; and on the other hand a sector focused on the domestic market. This latter, relatively protected from international competition, needs to make a significant adjustment effort. Growth perspectives for the Tunisian economy are in fact hindered by the current production structure, which prevents a higher level of growth being reached. The structure has two weaknesses: its strong dependence on European demand and on agro-ecological conditions, which has a fluctuating effect on growth; and its high specialisation in the production of goods that require intensive use of unskilled labour and have little added value (textiles and clothing, and the electricity and mechanical industries). This contains growth at levels that are not high enough to absorb incoming job seekers and reduce unemployment among university graduates.
Tunisia will therefore have to develop new sectors with a higher-range potential (by integrating design, conception and imitation) and move beyond assembly and outsourcing activities, which would be a good strategy to reach higher growth rates, absorb skilled labour and reduce the waste of resources. A structural transformation such as this requires an adjustment in the economic and social environment involving a qualitative change in interactions among the public administration, the university, research centres, the financial sector, the operation of the labour market and private enterprises.
In 2009, the services sector, which contributes to about 45.8% of GDP, grew at a sustained pace of 5.5%. This evolution is largely due to the 15% growth of the information and communication technology (ICT) sector and the 4% growth of financial institutions. In keeping with the authorities’ objective, the GDP share of ICTs is projected to reach 13.5% in 2012, versus 11.4% in 2009. Moreover, 2010 will be characterised by the introduction on the Tunisian market of Divona Telecom Orange, a third landline, cell-phone and Internet provider. The new operator’s arrival on the market should lead to improved services, lower prices and greater competition in the telecommunications sector. In 2009, 88% of the population was subscribed to the mobile telephone networks, 33.6% to the Internet and 11% had a computer, as against 82.7%, 27.1% and 9.6%, respectively, in 2008. These results confirm the recent World Bank ranking of Tunisia as first in Africa in terms of teledensity and of the number of computers per capita, and first in North Africa in terms of access to ICTs. The Global Information Technology Report 2009-2010 ranks Tunisia for its Networked Readiness Index at 39, before India (43), Greece (56) and Morocco (88).
In spite of the emergence of ICTs as the strategic sector of the country and in spite of the global crisis, tourist activity remains a driving sector of the Tunisian economy, having reported 1% growth in 2009, down from 4% the previous year. At the end of the first 11 months of 2009, however, nearly 6.5 million foreign travellers were estimated have visited the country, i.e. a 2.6% loss compared to the same period for 2008. The number of nights and the occupancy rate declined by about 7.8% and 4.3% respectively. Nonetheless, tourist revenues are on the rise (by about 1%, i.e. the equivalent of 3.21 Tunisian dinars [TND]).
The development strategy adopted by Tunisia rests on two growth levers: internal demand and exports. In 2009, whereas internal demand continued to represent a considerable share of real GDP growth of the order of 2%, the share of exports was negative: -2.4%. The share of final consumption was 2.5%, propelled mainly by household final consumption, which was estimated at 62.8% of GDP in 2009 versus 62% in 2008, contributing 1.9% to growth. This evolution is explained by the wage rises obtained as a result of the triennial negotiations. Public consumption and investment also increased in 2009 by 4% and 1.5%, respectively, thus contributing to growth at 0.6% and 0.1%.
In the area of global competitiveness, Tunisia is the leader in its region (Maghreb and Africa). It was ranked first in the Maghreb and in Africa by the 2008/09 Global Competitiveness Report of the Davos World Economic Forum (WEF), 5th in the Arab World and 36th globally, out of 134 countries.
Nonetheless, it lost four places in the latest 2009/10 report, in which it was ranked 40th out of 133 countries. According to this latter report, Tunisia must meet the challenges of its Labour Market Efficiency (where it is ranked 98th), in particular for the Rigidity of Employment (108th), Flexibility of Wage Determination (118th), Total Tax Rate (108th) and Female Participation in Labour Force (124th) indicators. In addition, the 2009 Index of Economic Freedom published by the Heritage Foundation and the Wall Street Journal ranked Tunisia 98th out of 179 countries. The report analysed economic freedom in terms of criteria including investment freedom, trade freedom, and employment freedom.


Macroeconomic Policy


Fiscal Policy
The 2009 slowdown in growth entailed a decline in budgetary resources and an increase in the budget deficit, which grew from 0.8% of GDP in 2008 to 3.9% in 2009. This share is projected to rise to 3.5% of GDP in 2010. At the same time, external-debt indicators continued to improve (the GDP share of external debt was limited to 41.5% in 2009 versus 42.6% in 2008), whereas domestic public-debt indicators continued to deteriorate, growing from 47.5% of GDP in 2008 to 48.7% in 2009. The budget deficit grew despite a decline in subsidies connected to the fall in the world prices of food and petroleum products.
The deterioration of the budget deficit is essentially due to the net decline in total tax revenue, down from 26.5% of GDP in 2008 to 23.1% in 2009, whereas the state’s total expenditure decreased only slightly from 27.3% of GDP to 27.0%. The public authorities financed the budget deficit by borrowing on the domestic market without affecting the credits to the economy, thanks to abundant liquidity in the banking system. The downward trend of the tax revenue is partly explained by the continued reduction of customs duties and of corporate taxes for enterprises finding themselves in a difficult situation, in order to reduce the negative effects of the global financial crisis. The reduction of customs duties aims to stimulate trade across borders and strengthen the competitive advantage of the economy. To support enterprises in a difficult situation and to limit unemployment, it was decided to lighten the tax burden, in particular for taxes on profits and on certain elements of production costs. To preserve their financial revenues and keep the principal economic aggregates balanced, the authorities recently adopted, at the same time, compensatory tax measures to limit tax evasion by reducing the flat rate in the system.
The Tunisian authorities otherwise implemented a few measures to contain the impact of the global crisis, in particular a budgetary recovery programme estimated at about 1.4% of GDP. They also pursued policies aimed at improving the business climate, in particular by simplifying the customs procedures and establishing a better logistical infrastructure to support international trade. They also intend to institute a “tax mediator” to settle litigation connected to tax filing before undertaking judicial procedures, which should reduce the number of tax reassessments.
The partial use of privatisation revenue to pay back some loans made it possible to reduce the public-debt share of GDP through to 2008 (which was 53.7% in 2006, 50.0% in 2007 and 47.5% in 2008). The share however took a slightly upward trend starting in 2009, when it reached 48.7% of GDP. It is projected at 49% in 2010. Despite this evolution, public debt remains relatively high compared to that of several other similar countries.

Monetary Policy
The main goal of Tunisia’s monetary policy is to preserve price stability (in keeping with Article 33 of Law N°2006-26 of 15 May 2006 modifying Law N°58-90 of 19 September 1958 on the institution and organisation of the BCT, the central bank of Tunisia). The inflation rate calculated on the basis of the Consumption Price Index fell between 2008 and 2009 from 5.1% to 3.5%. The fall in prices is essentially due to the fall in the international prices of basic products and oil. This trend should continue through 2010 with a projected 3.1% inflation rate. In light of this evolution, the BCT decided to not to change the key interest rate, but to pursue its efforts for the recovery of economic activity, support enterprises and provide appropriate financing to the economy, while preserving financial balances. New monetary-policy instruments were instituted in 2009, such as permanent deposit and credit facilities that banks can use as they wish either to cover their liquidity needs or to invest their surplus in the BCT. This measure should allow resident banks to improve their financial situation and lend more to enterprises that have been affected by the global crisis.
In the area of exchange rates, the monetary authorities adopted a policy aiming to align the real effective exchange rate (REER) on its fundamentals and to peg this policy to their medium-term goal of a floating exchange rate. This relative flexibility of the exchange-rate system resulted in a depreciation trend for the REER, fed by persistent negative shocks on the terms of trade and by the opening of the economy to the outside. This depreciation reinforced the competitiveness of exports. For the authorities, this period of controlled floating is an intermediate stage that should lead to the goal of a floating exchange rate, total convertibility of the dinar and perfect capital mobility. This goal had initially been set for 2010 but was postponed to 2014 because of the global crisis. Between January 2009 and 25 November 2009, the Tunisian dinar appreciated by 2.8% against the US dollar but depreciated by nearly 3.1% against the euro.

External Position
Tunisia’s policy of opening to the global economy was not challenged by the impact of the global economic and financial crisis. The authorities decided to continue lowering customs duties to comply with international commitments (World Trade Organization, Agadir Agreement, Arab Maghreb Union [AMU], free-trade agreements, etc.) and to stimulate economic trade across borders. Since 1 January 2008, Tunisia has constituted a free-trade zone with the European Union for industrial products. This means that all industrial products originating in Europe enter Tunisia duty-free, which is what Tunisian products had obtained back in 1998 for access to the EU market. This is in fact simply the last stage of a gradual dismantling process started in 1996. The country also intends to take advantage of other bilateral free-trade agreements (with Morocco, Jordan and Turkey) and the regional and multilateral plan with countries of the League of Arab States (the large Arab free-trade zone), the European Free Trade Association (Norway, Switzerland and Iceland) and the signatory countries of the Agadir Agreement (Morocco, Egypt and Jordan).
Tunisia has also signed a preferential trade agreement with Algeria, which provides for a number of advantages in the trade of industrial products made in either of the two countries. Complete exemption is instituted in the framework of yearly tariff quotas for two lists of agricultural products. The agreement does not affect the liberalisation of trade in agricultural and agri-food products. Discussion on this issue has been postponed to 2014. Tunisia is currently negotiating a free-trade treaty with its Algerian neighbour.
There has been more economic collaboration between Tunisia and Libya, especially for the construction of a pipeline to Tunisia. An underwater electricity cable connecting to Italy is also in the works. Tunisia also adopted the Euro-Mediterranean protocol of cumulation of origin to reinforce its economic and trade integration further. At the end of this process, Tunisia will have completed a set of free-trade agreements in accordance with the Barcelona Declaration, which aims to institute a Euro-Mediterranean free-trade zone comprising more than 700 million consumers by 2010. Other agreements are to be signed with African countries to open up to broader opportunities for the country’s exports. Negotiations on a free-trade agreement with the United States have been at a standstill since exploratory discussions were launched in June 2005.
At the same time, to limit the diversion-of-trade effect, on the one hand Tunisia reduced customs duties on products from other countries through free-trade agreements (such as the Agadir Agreement, in force since 2007), and on the other hand, performed a unilateral reduction of its common customs tariffs and the exemption or reduction of duties for a number of import products (with common customs tariff rates reduced from 22% to 17% and from 73% to 60%, and exemption of duties for capital goods and commodities with no local equivalent). In the framework of AMU reinforcement, a North African banking institution with its head office in Tunisia was established in January 2010 to finance agricultural and industrial projects in particular.
Moreover, the country is one of the main initiators of the Union for the Mediterranean, which comprises countries bordering the Mediterranean Sea and aims to encourage the sharing of resources and ideas in the fields of energy, security, the fight against terrorism, corruption, organised crime and illegal immigration. This initiative is, however, blocked by the conflict in the Middle East.
Tunisia’s trade value dropped sharply in 2009. Exports dropped by 17.6% and imports by 15.0%. The weak contraction in the trade deficit also led to a decline in the current-account deficit. In 2009, the trade deficit declined by about TND 381 million from 2008, and amounted to an 8.7% share of GDP, down from 9.8% in 2008, whereas the current-account deficit amounted to 2.7% of GDP, down from 4.2% in 2008. The decline in the value of exports and imports affected nearly all sectors and products. Mining products reported the largest fall with -56.0% for exports and -38.4% for imports, followed by chemicals (-43.0% and -26.6%, respectively), energy (-35.1% and -42.5%), agri-food products (-17.5% and -18.6%), products of the leather and shoes sector (-9.6% and -1.4%), textiles and clothing (-8.7% and -8.4%), building materials (-7.0% and +12.2%), machinery and mechanical materials (-6.1% and -5.5%), agricultural and fishing products (-6.0% and -32.6%) and electrical machinery and materials (-3.7% and -1.4%). Tunisia’s trading activities grew by 6.2% with AMU countries and by 7% with countries in the Far East. Tunisia’s trade surplus has come mainly from France, Iran, Libya and Italy.
The external-debt ratio declined between 2008 and 2009 and a sustainability analysis shows no signs of fragility. In fact, Tunisia has a rather enviable financial situation and a positive image among donors, both multilateral and bilateral. Debt servicing increased from 10.7% of exports in 2008 to 14.3% in 2009, and projections for 2010 and 2011 are 12.6% and 10.3%, respectively.
 

Structural Issues


Tunisia offers an attractive investment climate thanks to the many measures intended to encourage foreign investment. It was ranked 69th out of 183 countries for Ease of Doing Business by the World Bank’s Doing Business 2010 report and 65th out of 180 countries by the international NGO Transparency International in its Corruptions Perception Index. According to all the international rating agencies, including Standard and Poor’s, Moody’s, Fitch, and Rating and Investment Information, Inc. (R&I), Tunisia has a low payment-default risk on its external debt.
Tunisia has undertaken a privatisation process since 1986, which has been highly instrumental in instituting a market economy, developing private investment, enabling the state’s withdrawal from a number of competitive sectors and relieving public finances of the burden of a number of enterprises in constant deficit. Between 1987 and 2009, 219 enterprises were privatised, bringing in TND 5.976 billion. Nearly 90% of investment is foreign. In 2009, five public enterprises were privatised, adding nearly TND 100 million to the state budget. In 2010, the privatisation programme will be applied to 12 enterprises, including three as concessions.
The financial sector was not directly affected by the global crisis, thanks to the fact that its securitisation system is too limited, to financial loans’ being granted at fixed interest rates with consideration of the recipient’s repayment capacity and representing only 10% of banking commitments, to the Tunis stock market’s limiting foreign equity to 25% of financial capitalisation, and to Tunisian reserves’ having been invested in foreign currencies under strict prudential rules.
Nevertheless, the authorities have continued their long-term strategy of rationalising the banking sector, which has led to a lower rate of bad debts as a %age of total debts from 17.6% in 2007 to 15.5% in 2008 and an increase in the provisioning rate from 53.2% in 2007 to 56.8% in 2008. The authorities intend to carry on with this rationalisation effort in 2010 in order to achieve further solidity of the banking system in view of a gradual opening of the capital account and the liberalisation of the dinar in 2014. They also wish to adapt the regulatory framework as well as the framework for overseeing the evolution of the sector, and to consider banking oversight from a more forward-looking angle.
 
At the same time, Tunisia has scheduled some major tourist-promotion projects aimed at boosting economic activity. Among these is the 256-hectare Cité sportive de Tunis sports centre in the northern suburbs of Tunis (on the banks of the lake) promoted by the Emirati group Abou Khater. The Tunis Financial Harbour (TFH) is also among the most important projects. This port, which constitutes the first offshore financial-services centre in the North Africa region, will be completed in 2014 at El Hassiane, in the delegation of Kalaat El Andalous (Ariana). It will include modern financial infrastructure. Infrastructure work will begin in 2010 at the port entry, for about 35% of its total cost, estimated at USD 3 billion (about TND 4 billion).
The Radès-La Goulette bridge, in operation since 21 March 2009, links up three governorates: Tunis, Ben Arous and Ariana. This imposing structure, rising 20 metres above sea level and fixed to two towers 45-metres-high each, has greatly improved the circulation of persons and goods.
 
Other Recent Developments
The financial sector was not directly affected by the global crisis, thanks to the fact that its securitisation system is too limited, to financial loans’ being granted at fixed interest rates with consideration of the recipient’s repayment capacity and representing only 10% of banking commitments, to the Tunis stock market’s limiting foreign equity to 25% of financial capitalisation, and to Tunisian reserves’ having been invested in foreign currencies under strict prudential rules.
Nevertheless, the authorities have continued their long-term strategy of rationalising the banking sector, which has led to a lower rate of bad debts as a %age of total debts from 17.6% in 2007 to 15.5% in 2008 and an increase in the provisioning rate from 53.2% in 2007 to 56.8% in 2008. The authorities intend to carry on with this rationalisation effort in 2010 in order to achieve further solidity of the banking system in view of a gradual opening of the capital account and the liberalisation of the dinar in 2014. They also wish to adapt the regulatory framework as well as the framework for overseeing the evolution of the sector, and to consider banking oversight from a more forward-looking angle.
Tunisia launched a number of major infrastructure projects with the intention of becoming an international centre for trade and services and of becoming more integrated into its international and regional environment. The work started in the Greater Tunis area (Governorate of Ariana) and in other zones, such as Enfidha (between Sousse and Hammamet), generated many jobs and attracted external financing. Enfidha International Airport is one of these major projects, and is expected to be running in March 2010 with an initial capacity of 7 million travellers per year. There is also the deep-water port, which will comprise a 2 000-hectares zone for logistics and economic activities.
At the same time, Tunisia has scheduled some major tourist-promotion projects aimed at boosting economic activity. Among these is the 256-hectare Cité sportive de Tunis sports centre in the northern suburbs of Tunis (on the banks of the lake) promoted by the Emirati group Abou Khater. The Tunis Financial Harbour (TFH) is also among the most important projects. This port, which constitutes the first offshore financial-services centre in the North Africa region, will be completed in 2014 at El Hassiane, in the delegation of Kalaat El Andalous (Ariana). It will include modern financial infrastructure. Infrastructure work will begin in 2010 at the port entry, for about 35% of its total cost, estimated at USD 3 billion (about TND 4 billion).
The Radès-La Goulette bridge, in operation since 21 March 2009, links up three governorates: Tunis, Ben Arous and Ariana. This imposing structure, rising 20 metres above sea level and fixed to two towers 45-metres-high each, has greatly improved the circulation of persons and goods.


Public Resource Mobilisation


The state’s own resources increased by 19.8% in 2008 while expenditure increased by only 6.7%, thus reducing the budgetary deficit to 1.2% of GDP, down from 2.9% in 2007. Reforms of the tax system and rationalisation of public expenditure have made it possible to improve public-finance indicators and to fight against tax evasion. In fact, tax revenues (which constitute more than 80% of total resources) have increased at a sustained pace, with a 19.1% increase in 2008, up from a 12.3% increase in 2007. After a decline in 2007, non-tax revenues reported a substantial increase in 2008, due to public-enterprise surpluses paid to the state. Grants increased following the consolidation of budget support from the EU, both general and by sector. The share of tax revenues is on a slightly downward trend to the benefit of non-tax revenues, due in particular to the dismantling of customs tariffs following the institution of the free-trade zone.
The framework of the fiscal policy is defined and designed overall by the centralised institutions of the Ministry of Finance before approval by the two parliamentary chambers. In 2008, direct taxes increased by 23.3%, versus 19% in 2007. Their share of GDP was 8% on average over the 2002/08 period. This evolution was due to an increase in wages (2008-10) and in corporate profits. Indirect taxes, which were 13.5% of GDP over the 2002-08 period, increased by 16.3% in 2008, versus 8.3% in 2007. This increase is explained by the growth in GDP and imports (23.8%), and was achieved despite the continued reduction in the number of custom-duties rates, down from 54 rates in 2003 to 11 in 2007 and 9 in 2008.
Over the 2002-08 period, tax revenues generated an average 21% tax-burden rate and a 19% non-oil rate, despite a relatively developed informal sector. As estimated by Utica, the main employers’ union, the added value of the informal sector is somewhere between 15% and 20% of GDP, constituting between 3% and 4% of GDP in foregone tax revenues. The main elements of revenues are withholding taxes (direct taxing system), with tax privileges and a tax base that varies depending on the origin of the product and the nature of the tax.
For imports, there are custom duties, excise taxes, and other duties and taxes that put a strain on the CAF value of imports, as well the value-added tax (VAT), which is calculated on the CAF value of imports already marked up with all the previous taxes. In regard to local production, excise taxes and the other and taxes and duties are calculated on the value of the production before taxes, as well as VAT, calculated on the value of the production already marked up with the two previous taxes.
The finance laws of the most recent years have included budgetary provisions and measures aiming to improve competitiveness, promote social action, modernise the accounting system and reconcile the IRS with taxpayers. The World Bank’s Doing Business 2010 report ranked Tunisia among the 10 best-ranked countries in the Middle East and North Africa region, thanks, in particular, to its budgetary reforms. The country facilitated paying taxes by introducing an Internet-based filing and payment system. The system has two schemes. The first scheme (Internet filing and payment) was instituted in the framework of the 2001 finance law as a voluntary scheme. In 2005, this became mandatory depending on turnover. This scheme has not only reduced the frequency of payments and the time required to file and pay taxes, but most of all, as shown in the following table, it has produced higher filing and settlement rates, which has reduced the tax-evasion rate, thus reducing the transaction costs for tax collection.
Nonetheless, it is important to note that the enterprises that have registered for the scheme are mostly large ones and that many small and medium-sized enterprises (SMEs) have still been reluctant to do so. To address their concerns, the Tunisian authorities have introduced the possibility of filing online while paying the taxes in person at a tax bureau. The second temporary scheme (e-payment) was implemented in April 2008. These two procedures have just been reinforced by a third one, which allows taxpayers to pay with a bank card. In addition, Tunisia also put up a one-stop e-window (Tunisian Trade Net) intended to simplify procedures for trading across borders, as well as banking and transport procedures. It also offered enterprises the possibility of filling out social security contribution forms on line.
The number of taxpayers has been rising continuously year-on-year with a growth rate greater than 3.5% over the 2006-09 period. Their distribution by natural persons and corporate bodies is 85% and 15%, respectively. Natural persons are almost all tradesmen, craftsmen and service providers (93%), of which 78% are under a flat-rate tax scheme and 22% under a direct tax scheme.
The flat-rate scheme constitutes a tax-evasion niche because it allows taxpayers to file a notional income that is generally lower than their real income and this group forms the greatest mass of taxpayers (78%). To address this situation, and considering the moderate size of the oversight system (1 overseer per 6 files), the authorities intend to institute a specific tax system, which will reduce the flat rate in the corresponding scheme, provide a 20% rebate on the tax base to small enterprises that register with an integrated management centre for a period of five years, and also grant these enterprises, for their first three years of activity, a rebate on their tax base amounting to 75%, then 50% and finally 25%.
 


Social Context and Human Resource Development

 
 
The Millennium Development Goals (MDGs) should all be reached by 2015. The monetary poverty rate in Tunisia, which has a population of 10.486 million, was 3.8% in 2005, down from 4.2% in 2000 and 6% in 1995. This rate is expected to decline further in 2010. The downward trend is explained by the adoption of several programmes and mechanisms to fight against poverty. These include promoting the needy categories, developing a middle class, and giving women their place in society by giving them equal access to care and schooling. The goal is a balanced society based on solidarity.
In the area of employment, out of a working population estimated at more than 3.6 million, there were estimated to be just over 520 000 unemployed persons in 2008, giving a 14.2% unemployment rate. Unemployment is higher among the young, in particular among young university graduates, whose unemployment rate is higher than the average rate by 3 to 5 points. The authorities have implemented an active employment policy to address this problem. Since 2010, the country has been implementing a programme intended to hire more than 16 000 persons into the civil service, at least 70% of whom are to be university graduates. Credits allocated exclusively to employment will increase from TND 258 million in 2009 to TND 304 million in 2010, i.e. about 18% more. The major challenge of the Tunisian economy, however, is to solve unemployment at the root and not through its superficial manifestations. A deep mutation of the traditional sectors (textiles and clothing, agri-food, mass tourism, etc.) and the emergence of new innovative activities based on design, conception, imitation and international marketing are necessary not only to tackle unemployment, but also to achieve a superior level of growth and to reduce the waste of public resources.
The resources allocated to education and higher education remain high and have been estimated at 6.7% of GDP for 2009. The enrolment rates are 98% for primary schools and 60% for higher education. Reforms in higher education began four years ago, known as the Licence, Mastère et Doctorat (LMD) system, aimed at introducing greater flexibility, better consideration of job-market needs and an improvement in the quality of teaching. None of Tunisia’s universities have yet been included, however, in the top 500 of the Shanghai Academic Ranking of World Universities. Only two institutions have been ranked in the top 100 academic institutions in Africa (in January 2010).
The health sector has developed in the past few years in both the public and the private sectors in the direction of improving the quality of services to patients and easing the pressure on public hospitals. Health expenditure declined from 4.76% of GDP in 2008 to 4.56% in 2009, 2.66% and 2.59% of which, respectively, for the private sector. Health indicators improved between 2008 and 2009, with life expectancy at birth rising from 74.70 to 75.10 years, and the welfare-cover rate of employees who are members of the different welfare schemes rose from 92% in 2008 to 93.2% in 2009. Infant mortality declined from 18.4 to 17.0 deaths per thousand live births, while the number of physicians per 1 000 inhabitants rose from 0.968 in 2007 to 1.563 in 2009. The rate of access of pregnant women to prenatal consultation is 96%. The proportion of births in hospitals has also reached 96%. Several epidemiological diseases have been eradicated, including cholera, schistosomiasis, whooping cough, congenital tetanus and muscular dystrophy (no case has been recorded since 1992), and other pathologies such as chickenpox and tuberculosis are under control. More than 95% of the population have access to health services at less than 5 kilometres from their residence. The different family-planning programmes started in the 1960s have made it possible to limit births. The birth rate, estimated at 17 per 1 000 inhabitants, is constant. The population growth rate is also stable at 1.08%. HIV prevalence is low (0.1%), which allows the country to focus on prevention and provide free treatment to those who are HIV positive. These aspects in particular have put Tunisia in the 98th position out of 182 countries in the United Nations Development Programme (UNDP) Human Development Index (HDI) rankings.