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Return to core values of production, labour precondition for putting country back on track (Chahed)

Published the:  21/11/2017

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(TAP)- Premier Youssef Chahed Tuesday told the House of People's Representatives (HPR) the "improvement of the economic situation has been since the outset the priority of the National Unity Government which pledged to take the needed steps to reverse by 2020 the current trend of economic indicators."

He also said in a Government Declaration at the start of budget debates for 2018 "the first challenge was to stimulate the driving forces of growth, that is production, agriculture, tourism and investment. Return to the core values of production and labour is the precondition for putting the country back on track."

"Protests are legitimate and the St ate must be open to dialogue with all players. Nonetheless, production should not be paralysed at the risk of failing to settle social issues," Chahed cautioned.

Notwithstanding obstacles, progress was made: phosphate production increased 23% in November 2017, in comparison with the same period last year, reaching 4 million tonnes. Exportations also edged up 18% in the first ten months of the year compared to 2016.

Tourism likewise saw a significant recovery with tourist numbers, in particular, rising 28%. The number of European tourists and tourist receipts grew 20% and 18%, respectively, in the first ten months of the year. Six million tourists visited Tunisia up to November, a figure not reached for years now, the Prime Minister highlighted.

Foreign direct investment increased 13.6%; this upward trend is visible in agriculture (+66%), industry (+10%) and services (+40%). All these indicators and many others account for a growth rate exceeding 2% and allow to look forward for a 2.2% to a 2.3% growth rate at the end of the year, that is double last year's rate.

"This is a positive rate and a positive performance by the Government of National Unity for this growth is - for the first time after the Revolution, the result of a real production," the Premier emphasised. Manufacturing industries were up 2.8% with the clothing and textile sector, which employs 260,000 Tunisians, showing signs of recovery. This sector posted a 3.2% growth rate in the first nine months of the present year.

This rate is positive for market-related services, such as tourism and transport, rose 4% while non-market services in connection notably to public sector wages increased 0.26%. This is the real change that occurred in the growth structure and this is the kind of growth that will help generate permanent and productive jobs.

Yet, results remain insufficient, Youssef Chahed underlined. There is need to reach higher growth rates to bring about more jobs, strengthen regional development, upgrade infrastructure and improve public services. A 5% growth rate in 2020 is the target, he indicated.

"Four goals were set for 2020 in my last September speech before the HPR," the Prime Minister indicated. They consist of a budgetary deficit not exceeding 3%, a debt level of no more than 70%, a payroll standing at 12.5% of the GDP and a growth rate of 5% in 2020, he said.  

The economic policy lacked clear objectives and medium and long-range planning over the recent years, Chahed underlined. The budget deficit, as spelled out in the draft finance law for 2018, will be slashed to 4.9% in a first step towards reaching a target rate of 3% by 2020. This is important considering the way deficit impacts the exchange rate of the Dinar and inflation and consequently the purchasing power. Reducing the budget deficit in 2018 will also help curb indebtedness by 2020.

Chahed said it is inconceivable that three quarters of the State budget are earmarked for wages insofar as this will have a negative impact on the development package and reduce the State's social action and its support for job-creating investment.

The 2018 draft finance law forecast a 3% growth rate to attain 4% in 2019 and 5% in 2020, the Prime Minister said. The bill is centred around:

1/ promoting investment, encouraging savings and supporting SMEs.

2/ Fighting tax avoidance and fraud.

3/ increasing resources and establishing tax justice.

4/ improving services, preserving the purchasing power and reducing the unemployment rate.

Chahed said "we are open to the proposals of MPs as long as they agree with the essence of the law based on fairness in taxation." He spoke, in this vein, about the programme of economic recovery which rests on enterprises, exportation, regions and modern technologies.

The role of the State is to devise participative strategies that involve private economic operators. Priority is given to productive activities with a high exportation capacity. A host of measures were taken to curb importation so as to preserve the value of the Dinar and give a boost to productive sectors, Chahed highlighted.

Some projects were identified with total investments amounting to about 5 200 MTD; implementation is scheduled for the three coming years as part of the public-private partnership (PPP).

These projects will generate supplementary growth for the national economy. For this strategy to yield results, excessive bureaucracy needs to be fought as it has become a major obstacle in the way of investment, growth and employment.

The system of administrative authorisations is also under review to get the latter reduced by the end of the year and shorten deadlines for obtaining them.

"As regards foreign exchange controls, we will submit to the HPR a draft law that includes provisions to regularise the situation of Tunisians who have money outside the country," Chahed said.

An integrated development project in Saharan regions, which represent roughly two-thirds of the country's area, will also be launched.