Tunisia’s public debt, budget deficit hit alarming levels

Tunisia’s budget deficit has widened to 5,452 million Tunisian dinars, or 6% of GDP (against 3.9%, provided for by the 2016 Finance Law), said the memo on the economy for March 2017 published Tuesday by the Central Bank of Tunisia.

The widening of the budget deficit and the lack of mobilisation of certain external resources under the FL 2016 have led the Treasury to step up its use of domestic financing. As a result, public debt outstanding continued to rise to 61.9% of GDP at the end of 2016, compared to 53.4% originally projected in the FL 2016 and 55.4% in 2015.

This is mainly due to the increase in own revenue at a much lower rate than under the FL 2016, while non-principal debt expenditure has continued to accelerate.

The State’s own resources grew by 5.4% in 2016, compared with 12.4% in the FL 2016. This rise was due to a very moderate increase in tax revenues (1.2% compared to the rate of 11.4% provided for in the FL 2016).

On the other hand, non-tax revenues increased considerably following the receipt of proceeds from the sale of the 4G licence (431.1 MD).

Direct tax revenues declined by 3.1% in 2016 (compared to a 12.3% increase in 2016), reflecting a sluggish economic environment.

This decline resulted from a decrease in corporate taxes (-42.5% versus + 19.3% expected), which affected both oil and non-oil companies.

However, it was mitigated by the good performance of personal income taxes (+19.5% versus + 8.3% expected).

On the other hand, indirect tax revenues increased by 4.3% (when they were supposed to rise by 10.8%), thanks to the 22.6% rise in consumer duties that has made up for the drop in customs duties (-22.5%) and the poor performance of VAT (+ 1.6%).

Operating expenses increased by 7% in 2016 (versus -0.3% in 2015), and were boosted by the acceleration in remuneration expenses (+ 13.7% compared to + 9.9%), which contrasted with the decrease in subsidy expenditure. The latter concerned mainly fuel subsidies. On the other hand, there is a good performance of capital expenditures which have been set at a level comparable to the one provided for in the LF2016.


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