Chapter 1

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TABLE 1.5 Fiscal indkators (percmena of GDP) 1986 1987 1988 1989 190 1991 1992 193 Tota revenues 31.8 29.6 29.9 30.1 28.0 26.5 26.7 27.4 Tax revenues 23.1 20.5 20.3 21.1 20.8 20.2 20.1 20.7 Taxes on income and procrt 5.4 4.1 3.7 3.8 3.7 4.2 4.1 4.8 Taxes on goods and services 16.6 15.3 15.5 16.2 16.0 16.0 16.0 16.9 Taxes on intemational trade 4.6 4.1 4.5 4.8 4.6 4.4 4.4 4.4 Other 1.1 1.1 1.1 1.1 i.i 0.0 0.0 0.0 Nontax revenuert 8.1 7.9 8.0 6.1 5.7 5.1 5.4 5.8 Of which petroleum sector 4.5 4.4 4.5 4.1 3.6 2.1 2.2 2.0 Capita revenues 0.7 1.2 1.7 2.9 1.5 1.2 1.2 0.9 Total expenditures 37.3 32.6 33.6 34.0 33.4 30.5 29.2 29.9 Currem expenditures 25.3 23.5 23.3 26.2 24.1 23.4 22.9 23.0 Wagebill 11.1 10.5 10.5 11.1 10.6 10.9 10.7 10.7 Goods and services 4.0 3.7 3.5 3.8 3.6 3.5 3.4 3.3 Interest payments 2.7 2.9 2.9 3.1 3.0 2.9 3.1 3.3 Subsidies and transfers 7.5 6.4 6.4 8.2 6.9 6.1 5.8 5.7 of which to enterprises 5.2 4.2 4.1 5.6 4.5 3.7 3.4 3.4 CapiWlexpenditures 12.1 9.1 10.3 7.9 9.2 7.1 6.2 6.9 Direct investnent 4.1 3.5 3.6 4.0 4.7 4.2 4.4 4.4 Capita transfers 3.9 2.9 2.0 2.1 3.0 2.0 1.8 1.9 Net loans 2.0 0.6 0.4 -0.5 0.3 -0.4 -0.6 -0.1 Othercapitl uses 1.4 1.1 3.3 1.0 0.7 0.5 -0.2 0.0 Primary balance -2.8 -0.1 -0.7 -0.9 -2.6 -1.1 0.7 0.8 Overal defidt including grants -5.5 -3.1 -3.6 -4.0 -5.7 -4.1 -2.4 -2.6 Total financing 5.5 3.1 3.6 4.0 5.7 4.1 2.4 2.6 Net foreign financing 3.0 1.0 2.0 1.0 2.9 1.1 -0.1 0.6 Net domestic financing 2.5 2.1 1.7 2.9 2.7 2.9 2.6 2.0 a. Nontax revenue is defined as surn ofte oil revenue, interest and diMends, and tranders from social security to gcvemment Source: Wod Bank calculations; data from Ministry of Economic Deveopment, Compte corsolid de (lEtat, table V- I to V-8. TABLE 1.6 Regional comparisons Govemment revenue as a sare of GDP Composition of government 1990 -92 (pernt of GDP) Revenue, 1990-92 (percent) Middle Southest Middle Southeast Tunisia LAC EU East Asia Tunisia LAC EU East Asia Total revenue 29.5 18.8 33.8 25.6 22.9 100.0 100.0 100.0 100.0 100.0 Tax revenue 23.9 17.2 30.0 20.4 18.6 81.0 92.0 89.1 80.3 82.6 On income 3.9 6.6 8.4 6.2 6.9 13.2 37.1 25.2 26.1 29.4 lndMdual 1.7 n.a. 5.3 3.6 1.9 5.8 n.a. 15.6 12.7 8.6 Corporation 1.6 n.a. 2.4 2.2 4.5 5.6 n.a. 7.2 5.5 19.0 Soial security 3.8 0.8 6.5 0.3 0.2 12.8 4.0 17.4 1.3 0.7 On property 0.5 0.1 1.0 0.6 0.3 1.9 0.5 3.3 2.1 1.5 On goods and services 10.0 6.7 14.4 7.5 6.8 33.8 34.1 45.2 30.0 31.7 On inemationa trade 4.8 2.4 0.2 5.0 4.0 16.4 12.7 0.6 17.8 17.5 Other 0.9 0.3 1.0 0.7 0.4 2.9 1.5 3.0 2.8 1.7 Nontax revenwue 5.7 1.6 3.4 5.0 4.3 18.9 7.6 9.7 19.1 17.0 Entrepreneurial 4.8 0.0 1.4 2.7 3.1 15.8 0.0 3.9 9.4 12.3 Fees and fines 0.4 0.8 0.4 0.8 0.6 1.2 3.9 1.2 2.9 2.4 Other 0.5 0.7 1.6 1.3 0.6 1.9 3.7 4.5 5.8 2.3 Capitl revenue 0.0 0.1 0.4 0.1 0.1 0.2 0.4 1.3 0.7 0.4 Note: LAC - Ecuador and Clie; EU - Greece and Portl; Midde East - Jordan, Morocco, and Turkey; Sourheast Asia - Malysia and Thailand. Source: Data are from IMF Govemnment Rrnada Statis. The dab for Tunisia incwukx soial security and are not comparable wsh d Bank standard dassatwon. 10 TuNIsigS GLOBAL INTEGRAION AND SuSTNryABLE DEvELOPMENW STRATEGIC CHOICES FOR THE 21ST CEnruRY
was actually higher than that for the early part of the 1980s. surpluses of 0.7 percent and 0.8 percent of GDP, respec- Expenditures on goods and services were maintained at tively, were achieved. about 3.5 percent of GDP during 1988-93. Within this cat- For a complete analysis of the sustainability of the fiscal egory, more emphasis was given to operation and mainte- deficit, not only information on the central-government nance outlays, especially for infrastructure. Subsidies and deficit is required but also information on the consolidated transfers have declined from 7.5 percent of GDP in 1986 to nonfinancial public sector (which consolidates the central 5.7 percent of GDP in 1993, with temporary increases in government with local government, social security, and non- 1989-90 to compensate for two years of drought and high financial public enterprises) and on the consolidated total international cereal prices. Transfers to public enterprises to public sector (which adds to the first consolidation the Central cover their operating losses have declined but seem to be Bank and public banks). Unfortunately, relevant data on pubstill large (although more detailed data on the breakdown of lic enterprises and banks are not readily available. However, current transfers to public enterprises is needed for an there are some indications that the public enterprise, public unequivocal conclusion). bank sector is potentially a source of fiscal disequilibrium. It is encouraging that government direct investment saw Data for 121 of the estimated 200-250 public enterprises, its share in GDP, after a significant decline in 1987-88, in 1992, show a deficit of 6.8 percent of GDP out of total revrecover to an average of 4.4 percent in the early 1990s. This enue of 34.6 percent of GDP (see chapter 2, section on pubis important because the provision of public infrastructure lic sector activity and table 2.1). Regarding the public sector is vital to ensure high productivity of capital, which in turn banks, the 1993 audits show that they have a significantly produces high rates of economic growth. Capital transfers higher proportion of non performing loans as a share of their and net lending declined sharply from 1986 to the present, portfolio than the private banks. To a large extent, the diffrom 5.9 percent to 1.8 percent of GDP If this means that ference in nonperforming loans can be explained by the pubpublic enterprises are becoming less dependent on govern- lic banks' exposure to loss-making public enterprises and ment support and are seeking to finance their investments because of the public sector banks' efforts (and obligation) on competitive domestic and foreign financial markets, then to follow/implement government development programs the fall of capital transfers and net lending is a very healthy over the past three decades. The situation is improving, as the development. However, if some of these transfers and lend- share of nonperforming loans as a percentage of assets ing are now provided by commercial banks or if public decreased in 1993 over 1992 and is anticipated to improve enterprises are deteriorating as result of low replenishing again in 1994 (the latter will be confirmed when all the 1994 investment, the current fall of capital transfers and net lend- audits are completed and analyzed. ing may only represent a fiscal burden for the Government Deficit financing has changed considerably since 1986. in the future. The share of the budget deficit financed from foreign sources fell from an average of about 55 percent in the first Fiscal deficit half of the 1980s to about 30 percent in 1987-93 (table SA.2). Correspondingly, the share of domestic financing of In the period from 1986 to 1993, the central government FIGURE 1.6 deficit has ranged from 2.4 percent to 5.5 percent of GDP Fiscal balance (figure 1.6 and table SA.2). The budget deficit was highest Percent of GDP in the years 1989, 1990, and 1991. In 1989, this was due to 45 1 I"f bQicel,. the 1988-89 drought (the deterioration of the budget bal- 40 ,.° . ance was attenuated by drought-related grants); and in 1990 :' '- - and 1991, to the Government's attempt to mitigate the ,3 adverse economic impact of the Gulf crisis. Because of the appropriate management of the fiscal balance by the 30 1 * '-- 4-5 -5 _ / -6 "a0 bbnce Tunisian authorities, these increases in the budget deficit 5 Ta rerenum -7 Vr-d ) remained transitory. As a matter of fact, since 1991 the bud- 1980 1985 1990 1980 1985 1990 get deficit has been declining, and in 1992 and 1993 primary Source Wbrd Bank caulation; data from Minisby of Economic Devekpment. MACOECONOMIC POLICY 11
Page 1: Public Disclosure Authorized Public
Page 4 and 5: Copyright i 1996 The International
Page 6 and 7: Education policies 20 Basic educati
Page 8 and 9: 2.4 Demand for telephone connection
Page 10 and 11: Acknowledgments The report is a pro
Page 12 and 13: STIL Soci&e Tunisienne d'Industrial
Page 15 and 16: Executive summary Elements of Tunis
Page 17 and 18: ments and controlling the expansion
Page 19 and 20: Progress in strengthening market fo
Page 21 and 22: investment banking, restructure som
Page 23 and 24: Chapter 1 Macroeconomic policy The
Page 25 and 26: Box .I Monetary policy Instruments,
Page 27 and 28: TALE 1.3 Main monetary Indicators 1
Page 29 and 30: national markets and ensure the sus
Page 31: domestic production, and inducing a
Page 35: public banks and enterprises reveal
Page 38 and 39: (10 percent), and Malaysia (12 perc
Page 40 and 41: Infrastructure services: Provision
Page 42 and 43: on a pilot basis and is studying th
Page 44 and 45: or in the public sector. The Bank i
Page 46 and 47: onmental issues and their relation
Page 48 and 49: several industrial zones. Despite t
Page 50 and 51: vocational education more relevant
Page 52 and 53: also showed high effective rates of
Page 54 and 55: try an opportunity to accelerate a
Page 56 and 57: BOX 3.2 Free trade zones: Maximizin
Page 58 and 59: largest share of total employment (
Page 60 and 61: encouraging results and provides us
Page 62 and 63: ill market and to modernize the leg
Page 64 and 65: price/earnings ratio of about 25 in
Page 66 and 67: achieve their intended objectives i
Page 68 and 69: TABLE 4.2 crisis brought about an 7
Page 70 and 71: costly process of adjustment, the a
Page 72 and 73: ented economy The growth of exports
Page 74 and 75: as a whole, but the related transit
Page 76 and 77: Land degradation and water scarcity
Page 78 and 79: TABLE 5.1 Poky otfecdt Short term M
Page 80 and 81: TABLE 5.2 Complementary reforms (co
Page 82 and 83:
IMF (International Monetasy Fund).
Page 84 and 85:
Statistical Annex TABLE SA. I Exter
Page 86 and 87:
TABLE SA.3 Public sector accounts,
Page 88 and 89:
TABLE Sk6 GNP, output, and governme
Page 90 and 91:
TABLE SA.8 Money, credit, prices, a
Page 92 and 93:
TABLE SA IO Key economic variables,
Page 96:
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Chapter 1

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