Tunisian president prefers political survival over economic reform – US think Tank

Tunisian President Kais Saied has sapped five years in office without initiating reforms that could boost the competitiveness of the Tunisian economy, due to his focus on political survival, said a new study published by Carnegei Middle East Center.

“Although Saied antagonized large private enterprises with an anti-business and anti-elite populist narrative, he refrained from overhauling competition and regulation frameworks that would have constrained their rent-seeking. Nor did he create economic opportunities for small and medium enterprises (SMEs),” the study by Hachemi Alaya, Ishac Diwan, and Hamza Meddeb said.

Although growth dropped to an average 0.4% in the post revolution era, compared to 4,4% before that, Tunisia’s economic woes are due to “dysfunctional political system that has resisted a structural transformation of the economy,” it said.

Unfair competition from large companies and the informal sector left medium-sized enterprises struggling, further contributing to Tunisia’s sluggish economy, it said.

“Despite pressure from international financial institutions and Tunisian nongovernmental organizations to reform the competition framework and improve market access for SMEs and new entrepreneurs, little progress was made due to resistance from influential business elites and the accommodating stance of political elites toward them,” according to the study.

Saied has also engaged in clientelist practices to expand his support base including by transferring land ownership from the state to his supporters and redistributing wealth from business elites to his base via bank credits.

The study in the end recommends reopening discussions with the IMF regarding a homegrown reform program, with a view to “meeting the country’s external financing needs, securing funding for SMEs, and reducing the banking sector’s exposure to sovereign risk.”