Tunis: Due to austerity measures that may pave the way for a final agreement with the International Monetary Fund on a rescue package, Tunisia expects to reduce its fiscal deficit from a forecast 7.7 percent this year to 5.5 percent next year.
Government critics claim that the nation has been in desperate need of international assistance for months as it struggles with a financial crisis that has stoked concerns that it may default on its debt and contributed to food and fuel shortages.
In contrast to the 2.5 percent predicted for this year, the Economy Ministry announced on Friday that economic growth would be 1.8 percent in 2019.
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The nation's need for external borrowing will rise by 34% to 16 billion dinars ($5.2 billion) in the upcoming year, while public debt is predicted to increase by 44.44% to 20.7 billion dinars.
In exchange for unpopular reforms, such as reducing food and energy subsidies and reforming public companies, Tunisia and the IMF have reached a staff-level agreement that will provide a $1.9 billion rescue package. In a few weeks, a final agreement is expected.
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According to the budget for the following year, which was released by the ministry of the economy, Tunisia plans to cut subsidy spending by 26.4 percent to 8.8 billion dinars. The government also hopes to increase tax revenue by 12.5%, or 40 billion dinars, by raising the tax rate on some employment from 13 to 19 percent.
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In light of Tunisia's struggle with poverty and inflation, which reached a record 9.8% last month, the influential UGTT union, which has about 1 million members, has stated that it would oppose the finance law if it were to pass. It also added that this could lead to a social explosion.
With the implementation of the reforms, which the union described as "very painful," the ministry said it anticipates that inflationary pressure will persist.