May crisis puts Tunisian government in trouble

Just a few days separate Tunisia from a possible financial crisis, according to the inability of the Tunisian government to pay employees' salaries for the month of May in light of crises sparked by the Brotherhood-affiliated Ennahda movement, which is in a state of permanent clash with President Kais Saied.

Tunisian MP Yassine Ayari said that the state is required to provide 700 million dinars (more than $256 million) within two days to secure the employees' salaries that are supposed to be disbursed.

He explained in a post on his Facebook account that the state’s current account now has available only 960 million dinars, while the salaries of employees are worth 1.6 billion dinars, which will push the state to search for 700 million dinars to secure the mass of wages.

Ayari added that the solutions would be to request quick loans from banks, and if liquidity was available, it would be with fantastic interest, which would at most only delay what he described as a “shock” for a few weeks.

This coincides with the most difficult economic crisis the country is going through due to the confused political conditions and the repercussions of the spread of the corona virus. Tunisia recently entered into negotiations with the International Monetary Fund to obtain a loan of $4 billion.

Economic changes

Mosaique FM reported on Tuesday that, according to the government reforms document that the Tunisian delegation will present to the IMF in order for the required loan to be passed, changes must be made to the economic system, including the gradual elimination of subsidies for basic materials in stages over the next four years and directing them to those who need them.

On Friday, Prime Minister Hicham Mechichi said in an interview with Reuters that Tunisia is seeking a loan program of about $4 billion with the IMF over three years in exchange for a package of reforms proposed by the government with the aim of reviving its ailing economy. Among the reforms is the lifting of subsidies on electricity and gas, a stage that follows the removal of food subsidies, in addition to reducing the salary mass and reforming tax collection and public institutions.

Raising wages

On the other hand, the Tunisian General Labor Union, headed by Noureddine Taboubi, speaks in another valley. On May 1, it demanded the necessity of raising the wages of workers in the public and private sectors, calling on the government to start examining this file to improve the standard of living of Tunisians.

In his Labor Day speech, Taboubi called for transparency and clarity in all economic files, especially during its negotiations with countries and global financial institutions. He warned against taking decisions without referring to the social partners and the people, calling for the country's sovereignty to be above all considerations.

He warned of an imminent collapse of the economy, the repercussions of which will be dire for Tunisians and workers, considering that the decline in all economic indicators following the health pandemic is a result of the fragility inherent in the country's economy, which requires deep and rapid reforms and the comprehensive involvement of all political forces in its implementation.

Taboubi urged the Tunisian government to press ahead with reforming government institutions, based on the agreement signed with the Tunisian General Labor Union, according to which seven institutions were placed on the list of urgent reform.