The Finance Law 2025 recently presented by the Tunisian government is causing quite a stir in the country's economic landscape. Despite its social-state ambitions, it raises doubts about its viability and ability to meet the real economic challenges facing Tunisia. Against a backdrop of financial crisis, mounting debt and galloping inflation, the proposed measures seem more the stuff of populist promises than a genuine economic recovery strategy.
The government has promised to strengthen social support for Tunisians through wage increases in the civil service and subsidies for basic necessities. However, while these measures meet immediate needs, are they really sustainable? The planned wage increases must be accompanied by clear sources of funding. Indeed, how does the government intend to cope with an inflation rate in excess of 10% and an already alarming budget deficit, without resorting to additional borrowing or higher taxes?
Take food subsidies, for example. While these subsidies are essential for maintaining household purchasing power, they also represent a significant burden on the state budget. In 2023, subsidies absorbed almost 6% of GDP. With limited financial resources, the sustainability of these measures is in doubt, especially as they are likely to generate an even greater deficit in the future.
To finance this spending, the 2025 Finance Law envisages a significant increase in taxation. Businesses and households will have to face higher taxes, which could have disastrous consequences for the Tunisian economy. Increased taxation could discourage foreign investment, at a time when Tunisia desperately needs capital to boost growth. In 2023, the drop in foreign investment reached a critical level, down 30% on the previous year. Increasing the tax burden on companies in this context could prove catastrophic.
Take the tourism sector, a pillar of the Tunisian economy that has already been hard hit by the COVID-19 pandemic. By raising taxes on tourism businesses, the government risks discouraging investment in this vital sector. It could also harm employment, given that tourism directly and indirectly accounts for almost 15% of total employment in Tunisia. Instead of stimulating tourism recovery, the government risks creating a climate of uncertainty that could hamper any possibility of recovery.
The Finance Act 2025 also envisages greater recourse to public borrowing to finance government spending. This approach raises major concerns. Tunisia's public debt, which stood at over 90% of GDP in 2024, is already a heavy burden on national finances. By embarking on a spiral of borrowing, the government is exposing itself to increasingly high interest rates, especially in a context of global monetary tightening. If the country continues on this path, it could quickly find itself in a situation of default, which would be catastrophic for the economy and investor confidence.
The example of Greece, which faced a debt crisis in the 2010s, should serve as a warning. Years of borrowing policies and budget deficits led the country into a deep recession and severe austerity measures. Tunisia cannot afford to follow this path, especially when it is already struggling with high unemployment and growing social tensions.
While the government claims to want to launch structural reforms to revive the economy, the proposals contained in this finance law seem insufficient. Tunisia needs bold reforms in key sectors such as agriculture, industry and digital technology. For example, agriculture, which employs nearly 15% of the working population, needs to be modernized to improve productivity and profitability. However, the Finance Act only skims over these issues, without providing any concrete solutions.
In addition, small and medium-sized enterprises (SMEs), which represent the majority of Tunisian businesses and are essential for job creation, need a favorable legislative framework and real incentives to develop. Promises to support SMEs, if not accompanied by concrete measures, risk going unheeded. Tunisian entrepreneurs face daily challenges, including excessive bureaucracy and lack of access to financing. Ignoring these realities will only worsen the country's economic situation.
The Finance Law 2025, as presented, looks more like a catalog of good intentions than a coherent plan for economic recovery. Promises of a social state, higher taxation and recourse to borrowing do not constitute an adequate response to the structural problems facing Tunisia.
To avoid sinking further into the economic quagmire, the Tunisian government must develop a solid, coherent strategy that combines social justice and sustainable growth. The decisions taken today will determine Tunisia's economic future. Citizens deserve a development plan that ensures their prosperity and dignity, not empty promises that risk plunging them further into precariousness. The time has come to act with responsibility and vision, because the country's economic future depends on it.
