Tunisia - Fitch Ratings, the international credit rating agency, forecasts a decrease in Tunisia's budget deficit to 5.8% of GDP in 2023, compared to 6.9% in 2022, thanks to a rationalisation of wage expenditures, measures taken in the field of tax reform, and an improvement in state resources.
In a recently published note, the rating agency highlights that during the first half of 2023, Tunisia posted a budget surplus of TND58.8 million (around 0.4% of GDP) in 1H23, influenced by lower-than-expected spending which reached only 38% of the full-year budgeted level. Subsidies and transfer expenditure in 1H23 was just 27% of the annual amount budgeted.
Fitch estimates the energy and food subsidy costs to fall to about 6% of GDP in 2023 from 8% last year, supported by lower international prices and 2022 domestic fuel and electricity price adjustments.
However, Fitch Ratings cautions that the budget surplus should not be considered stable because "some costs relating to subsidies and transfers over the period have not yet been captured in the budget numbers."
The rating agency also emphasised that the agreement reached in August 2022 with the Tunisian General Labour Union (UGTT) - to control the growth of the wage bill continues to hold, and has allowed the government to keep wage expenses in line with budget in 1H23. The deal is factored into Fitch's forecast that the budget deficit will fall to 5.8% in 2023, from 6.9% in 2022.
It is worth noting that the state budget recorded a surplus of 58.8 million dinars during the first half of 2023, compared to a deficit of 687 million dinars during the same period in 2022, according to the document "Provisional Results of the State Budget Execution," recently published by the Finance Ministry.
This improvement is attributed to a 6.6% increase in budgetary resources, reaching TND 20.58 billion by the end of June 2023, primarily due to an increase in tax revenues (8.3%) compared to a near-stabilisation of wage expenditures (2.8%).
Tunisia's external debts decreased from TND 5607.7 million at the end of June 2022 to TND 2710.3 million during 1H2023, marking the first decline of this kind since 2011.
In the same vein, the Finance Ministry reported a decrease in domestic debt, demonstrating that the Tunisian government has managed to avoid heavy reliance on debt, which has worsened over the past decade, bringing the public debt to TND 119.8 billion, with TND 57.1 billion representing external debt.
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