Gov’t will gradually redirect subsidy (PM’s economic adviser)

June 6, 2021

TAP) - Hichem Mechichi's government does not intend to remove the subsidy of some commodities but will work to gradually redirect the compensation system to needy groups, such as poor families and low income, and families with average income or above average, said Economic Adviser to the Prime Minister Abdessalem Abassi.

This approach will be implemented through a scientific method, and in consultation with the political belt of the government and national organisations, such as the Tunisian General Labour Organisation (UGTT) and the Tunisian Confederation of Industry, Trade and Handicrafts (UTICA), he told reporters on the sidelines of a national conference held in Ghammarth on the 40th anniversary of the Ennahdha movement.

The government, which will not initiate reforms without the agreement of various parties, is preparing the mechanisms that will accompany the redirection of the subsidy of certain consumer products to those entitled, he said.

He added that it is not possible to increase prices without ensuring that families in need benefit of subsidy and financial transfers.

Regarding what has been reported on wage reduction, Abassi said reform in this area concerns the reduction of the rate of wages in relation to the Gross Domestic Product (GDP). He noted that mechanisms and programmes have been presented to the various political actors and the UGTT, with the aim of taking consensual measures.

For his part, Minister of Finance Ali Kooli recalled the difficult situation underwent by the country since 2010, noting that the next steps of reforms will be painful.

The government must communicate on this issue and keep the people informed of the real situation of the country and is called to identify radical solutions to improve the situation.

One of the main axes of these reforms is restructuring state enterprises, their operation mode and their ability to generate profits, he said.

Hence, following the change of assumptions on which the budget was based, the government is obliged to mobilise external resources estimated at 3,877 million dinars (MD) and internal resources estimated at 4,255 MD in the coming period to avoid the risk of default in August 2021.

Experts also believe that if the government fails to raise additional resources, either through the U.S. guarantee (1 billion dollars) or by receiving exceptional loans in the framework of bilateral cooperation, a financial deficit of about 3,300 MD could be recorded during the month of August 2021, as expenditures will reach 31792 MD late that month, while resources will be 28491MD.


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