Policy Briefs
Debt and Stabilization in Tunisia: Building Resilience and Avoiding the Austerity Trap
No.
PB 115
Publisher
ERF
Date
September, 2023
In a nutshell
Tunisia has been facing major disequilibria in its public finances. To stabilize its debt and foster a growth approach, Tunisian policymakers should:
- Refrain from adopting an approach that relies entirely on austerity, as this is likely to generate social resistance that undermines adjustment and further harms the growth process.
- Break away from the fundamentalist approach of austerity that penalizes potential growth and collective well-being.
- Develop a national program for adjustment and recovery that places greater importance on restarting the growth process.
- Elicit citizen support for reforms and build a coalition for change to guarantee the implementation of reforms without running the risk of a rise in social and political instability.
- Include climate change challenges in this national program by greening monetary and fiscal policy and strengthening research and development efforts to boost the circular economy.
Research Fellows
Leila Baghdadi
Professor of Economics, ESSECT, University of Tunis
Authors
Moez Labidi
Senior Advisor to the Arab Planning Institute...