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Economy of Tunisia - Research Paper Example

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Economic Growth of Tunisia The economy of Tunisia started going through a recovery period in 2012 after experiencing decades of heavy state participation and government control. In the last decade, it has been growing at an increasing rate due to the government’s use of monetary and fiscal policies…
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Economy of Tunisia
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Download file to see previous pages This saw the unemployment rate drop from 18.9 per cent mark to 16.7 per cent in 2012. The biggest contributors of this growth were the growth of the tourism industry and the mining industry that were heavily affected in 2011. The increased consumption that the country had been experiencing in 2011 from large public expenditures on wages and social programs significantly reduced in the subsequent year. The economy of Tunisia is largely depended on oil, phosphate mining, agri-business, manufacturing of car parts the vibrant tourism sector. In 2011, the country was going through a rough time due to political uncertainty and instability of Libya, and the ever persistent social tensions that were combined with a weak performance of the Euro in the Eurozone. These major factors have been a reason for the slow recovery of the economy (Stampini, and Verdier-Chouchane 2). In 2012, the government of Tunisia wanted to boost the economic recovery by easing the social tensions and trying to improve on both its expansionary fiscal and monetary policies. This however did not happen, as only a percentage of what was an ambitious fiscal stimulus package approved in the supplementary budget of 2012 was executed. The actual budgeted expenditures were converted into consumption from their initial investment allocation (Stampini, and Verdier-Chouchane 3). Inflation in the country had a steady rise to 5.9 per cent mark in late 2012, compared to 4.2 per cent the previous year. This was characterized by increased food prices and the general cost of living to the people. Due to the increase in the public discontent because of increased general cost of living, Central Bank of Tunisia tightened the country’s monetary stance in the mid months of the year 2012 to revert the expansionary monetary policy (The World Bank n.p.). Despite the challenges faced by the economy, the economy of Tunisia is ranked at first position in Africa and at the 36th position in global rankings ahead of Portugal, ranked at 43, Italy, ranked at 49, and Greece at 67 due to its economic competitiveness. Taxes and Debt of Tunisia Tunisia has a high public debt that some analysts consider that it should consider demanding for a reschedule, suspension or even cancellation of the public debt. In the year 2012, the country’s current account deficit widened and hit an 8.1 per cent of the country’s total Gross Domestic Product, financed by Foreign Domestic Income and the external financiers pumped huge inflows of external official financing into the economy. Currently, the public debt stands at 14.4 billion dollars, meaning that the range of the external debt to the GDP is just a little below 50%. Although this is a high rate of the debt, it is yet to reach the untenable range of 60% of the GDP, while the government deficit exceeds 3.0%. The country is yet to reach the threshold where most of the under developed and developing countries are, of an exorbitant debt. Some economists argue that the debt should be cancelled, on grounds it is an odious and illegal debt that arose from the interests of the ousted president and his relatives, yet the Tunisian people did not see any of it (Tunisia: 2012 Article Iv Consultation 135-149). These issues have been forwarded to the International Crisis group, that has been mandated with the task of determining what the real debt of the country is and what was ...Download file to see next pagesRead More
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