- Basic data
- Public finances and the state budget
- Banking system
- Tax System
After the economy fell by 8.6% in 2020, growth returned to approx. 3% per annum. However, the pace falls far short of its potential. The reason is the structural problems of the economy and the critical state of Tunisian public finances, combined with the increase in fuel and grain prices as a result of Russian aggression in Ukraine. Key sectors of the economy such as energy, logistics or phosphate mining and processing are dominated by loss-making state-owned enterprises. As a result of the COVID-19 pandemic, unemployment rose to 18.3% and hit the university-educated group (31.2%) and young Tunisians the most. Inflation hovers around 7%, but, for example, exceeds 20% for some foods, with a major impact on the quality of life of Tunisians.
According to cheeroutdoor.com, Tunisia represents a lower-middle income economy with a highly skilled workforce with extensive knowledge of the French language. The pillars of the Tunisian economy are services (45% of GDP), especially tourism, and the export-oriented mechanical and electrical industry, textile and chemical industry or agriculture. the pharmaceutical industry, which is experiencing significant growth, is also a strategic sector. Exports in total cover roughly 40% of GDP and, after a drop due to the COVID-19 pandemic, in 2021 already exceeded the values of 2019 by USD billion, however, the negative trade balance persists for a long time. Exports to Libya, a traditional trade partner for Tunisia, increased by 43.5% compared to a 13% increase with the EU during 2021. Tunisia is seeking to expand exports to sub-Saharan African countries. Significant export growth occurred in 2021 in the areas of energy, phosphates, textiles, engineering and electrical engineering. Exports of the food industry, on the other hand, fell by 3.9%. To a greater extent, Tunisia imported capital goods, raw materials and semi-finished products, consumer goods and energy.
|GDP growth (%)||1||-8.6||3.4||2.7||2|
|Export of goods (billion USD)||15||13.8||16.7||17.9||18.2|
|Import of goods (billion USD)||21.6||18.3||22.5||23.9||24.9|
|Trade Balance (Billion USD)||-5.4||-3.5||-4.4||-4.5||-5.2|
|Industrial production (% change)||-3.4||-5.2||4||3.4||3.8|
|OECD export risk||06.VII||06.VII||06.VII||ON||ON|
Source: EIU, OECD, IMD
Public finance and state budget
|State budget balance (% of GDP)||-8.3|
|Public debt (% of GDP)||82.2|
|Current account balance (billion USD)||-2|
The 2022 Finance Law set the budget at TND 57.291 billion (CZK 436.661 billion) with economic growth of 2.6%, inflation of 7% and a price of USD 75 per barrel of oil. The budget deficit was set at TND 8.5 billion (CZK 6billion), or 6.7% of GDP, with a debt ratio of 82.4% of GDP. The total financial needs for 2022 amount to CZK 152 billion (64% are to be covered by international loans). The measure of the law is primarily aimed at increasing liquidity through tax revenues, it contains symbolic steps to gradually reduce the number of civil servants (even if the costs themselves are increasing), and to support economic actors affected by the economic crisis. In the fight against the parallel economy, it continues the traditional way by limiting cash transactions. The foreign exchange reserves of the Central Bank of Tunisia reached approximately TND 2billion ($7.96 billion) in April 2022,
The already deficit budget, based on the expectation of a quick negotiation of a still unconfirmed loan from the International Monetary Fund, continued to collapse in connection with Russian aggression in Ukraine. The increase in the price of grain and oil subsidized by Tunisia led to a deepening of the budget deficit to 9.7%. Moody’s downgraded Tunisia’s overall rating to Caa- due to Tunisia’s uncertain capacity to meet its financial obligations. Getting an IMF loan will depend on the ability to push through painful reforms at the powerful UGTT union. This is mainly about the restructuring of state-owned companies, the reduction of subsidies for basic products, and the reduction of the number of state employees, whose salaries in 2020 represented a record 17% of GDP.
The Tunisian financial system includes the Central Bank of Tunisia (BCT), 23 resident banks, 7 off-shore banks and 13 financial institutions. The Tunisian banking sector occupies an important place in the country’s economy. Financial services contribute approximately 3% to GDP. However, the Tunisian banking system is highly fragmented, and divided between 4 large banks managing 51% of the sector’s assets and each holding a share of assets exceeding 10%; 5 medium-sized banks together monopolizing 34% of the sector’s total assets; 11 small banks sharing the remaining 15% of total assets. The banking system has managed to create a large network of representatives and agencies. Currently, there are more than 1,905 branches, or approximately one branch for every 5,775 residents.
The three largest public banks represent 37% of the total assets of the banking sector: Société Tunisienne de Banque (STB) with 5percent of public capital, National Bank of Agriculture (BNA) with 6percent of public capital and Bank of Habitat (BH) with 57% public capital. At the end of 2019, the capital of local banks was TND 3,892 million, which was divided between the Tunisian state (33.9%), foreign shareholders (39.5%) and Tunisian private shareholders (26.6%). The share of the Tunisian state is gradually decreasing (-2.2%) compared to the increase in the share of foreign shareholders (6.2%).
Circular no. 2019-08 of 2019 BCT redefined Islamic banking operations (commercial financing, financing of “Moucharaka” operations and investment deposits), and established the conditions for their implementation. Islamic banking is gradually consolidating its position with almost 0.9% of the asset market share, 1.7% of the deposit market share and 1.6% of the loan market share.
In connection with rising inflation, BCT raised the base interest rate by 75 points to 7.0% in May 2022, and at the same time increased the minimum interest rate on savings from 5 to 6%.
The tax system in Tunisia undergoes frequent changes, mainly regarding VAT rates and PO income tax, although the latest changes from 2021, which unify the tax rate for different types of companies, suggest greater stability of PO income taxes at least in the short term. The information on the official website of the authorities is not always updated. It is therefore recommended to use a wide network of tax advisors who can provide accurate information about any changes or exemptions.
The basic value added tax (VAT) rate is 18%. The Finance Act for 2022 brought certain reliefs with regard to products for protection against the coronavirus. Gels, masks, gloves, etc. are now taxed at 7%. From 2021, a reduced VAT rate of 7% is also applied to telephone and internet services. Alcohol, furs, precision engineering products and precious metals are taxed at 29%. VAT paid on input is deductible. Zero tax is applied to bread, grain oil, milk, tomato paste, couscous, books and newspapers. Air and sea transport and bank fees are also exempt from VAT.
Personal income tax (FO) is paid from the amount after deduction, the deduction is 15% for personal income tax and progressively increases up to 35% depending on the amount of income. Every natural person with a habitual residence in Tunisia is subject to income tax, non-residents pay income taxes at source. Income up to TD 1500 is exempt from income tax.
From 2021, the corporate income tax (PO) was unified at 15% for fully exporting companies (the so-called offshore regime), which until now used reduced rates, and companies falling under the general regime, whose rate was reduced from 25%. Exemption from PO tax for companies in the off-shore regime remain within the so-called regional development zones for a maximum of 10 years. Furthermore, the PO rate may vary depending on the industry. It reaches 10% for agriculture and fishing and 35% for the financial sector and the hydrocarbons and telecommunications sectors.
Other taxes: Consumption tax is usually from 10-150%, high consumption tax is assessed on hard alcohol and luxury cars. On the contrary, in 2022 the consumption tax for hybrid and electric vehicles was reduced.