In order to reduce the budget deficit and avoid exceeding the threshold of 3.9% of GDP by 2026, as set out in the Ministry of Finance’s Medium-Term Budgetary Framework 2024-2026, the government needs to boost economic growth to generate more tax revenue,” said economist Moez Hadidane.
This recently published document forecasts a gradual reduction in Tunisia’s budget deficit over the next three years to 6.6% of GDP (TND 11.5 billion) by the end of 2024, 5.2% of GDP (TND 9.8 billion) in 2025 and 3.9% of GDP (TND 8 billion) by the end of 2026.
In order to achieve these targets, the expert, in a statement to the TAP agency, recommended greater economic and regulatory stability (particularly in terms of fiscal policy), in addition to the implementation of a number of legal texts, in particular those relating to investment promotion.
There is also a need to streamline administrative procedures, fight embezzlement and corruption, and ensure good governance and a healthy climate for public institutions and suppor
t structures under the authority of the state.
According to the Ministry of Finance document, the state plans to continue its efforts to collect taxes and broaden the tax base, in particular by gradually integrating the parallel market into the formal sector.
At the same time, it (the state) plans to rationalise budgetary expenditure, taking care to keep the wage bill below 13% of GDP. “This means increasing hiring in line with economic growth to avoid hiring only when there is a real need,” Hdidane pointed out.
Tunisia’s wage bill is expected to rise from TND 23.7 billion (or 13.5% of GDP) in 2024 to TND 24.7 billion (13% of GDP) and TND 26 billion (12.6% of GDP) in 2026.
On another level, the economist believes that it would be essential to adopt measures to rationalise transfers and subsidies in order to target those in need.
In his opinion, intervention expenditure (subsidies), estimated at TND 19 billion (2024 finance law), should fall to TND 15 billion in 2026, while the state plans to maintain it
at this level (TND 19 billion) in 2024, 2025 and 2026 (according to the finance ministry document).
The economist also advocates “the withdrawal of the state from certain public companies, namely RNTA, El Fouladh and the air and sea transport companies, through privatisation or management under public-private partnership agreements”.
“The additional budget revenues generated by the improved economic growth rate and other measures should be used to finance investment projects. This is not provided for in the Ministry of Finance’s document, as investment spending will only account for 9% of total budget spending in 2026 (around 5.8 billion dinars),” Hadidane noted.
“We cannot revive economic growth without the state itself being the main investor, especially in infrastructure, ports, etc.,” the economist said. He went on to say that “public investment is a driving force that encourages the private sector to invest more and thus generate more budget revenue”.
In this context, he explained that one billion di
nars earmarked by the state for investment will help generate around 0.5 points of additional economic growth and 1 billion dinars more in tax revenues over the next three or four years.
Source: Agence Tunis Afrique Presse