Tunisia's economy: earning in Europe, borrowing at home

How Tunisia came to borrow from its central bank

Tunisia joined the International Monetary Fund on 14 April 1958 and has entered into eleven arrangements with it. The Fund's last Article IV consultation with the country was held on 17 February 2021, and its country page still listed 303.06 million SDR of purchases and loans outstanding on 30 September 2026.

The latest programme foundered on subsidies and wages. In mid-June 2022 the Tunisian General Labour Union (UGTT) called a public-sector strike against a reform plan that included freezing wages and cutting subsidies, part of the government's effort to secure a 4 billion dollar IMF loan. The Fund's position at the time was that structural problems were producing weak growth, weak investment, high unemployment and social inequality. In October 2022 the government reached a staff-level agreement for 1.9 billion dollars, conditional on lower subsidies, the privatisation of state-owned enterprises and a smaller public wage bill, and opposition grew. In April 2023 the president rejected the bailout, denouncing the "diktats of the IMF" and their likely effects on Tunisian society. Six months later he dismissed the finance minister, Samir Saied, who had said an agreement was needed to secure access to foreign financing.

The money came from home instead. The 2016 ban on lending to the treasury had already been circumvented through a legal loophole during the COVID-19 pandemic, and what was described then as an exceptional measure became the precedent for financing the state without an IMF programme. Parliament amended the law in February 2024 and approved the second loan in December 2024 through an addendum to the 2025 budget law. On 16 October 2026 La Presse ran a headline on a 9.8 billion dinar loan from the central bank in the draft finance law for 2027.

Fitch rated Tunisia CCC- in 2023 and raised it to CCC+ in September 2024, judging that the state remained committed to its external debt payments and could still find limited but persistent foreign financing. The BTI country report of 2026 records warnings that central bank lending will be paid for in future inflation and in foreign-exchange reserves, which stood at 8.45 billion dollars in 2024.

Where the Tunisian budget money goes

Fiscal revenue came to 30.1% of GDP in 2023, after the 19% rate of value-added tax was extended across the economy and collection improved. Spending came to 37.2% of GDP.

Subsidies on electricity, fuel and food reached 12% of GDP in 2023, and those on electricity and gas alone came to 10%. In December 2022 the government had expected austerity to bring the deficit down to 5.5% of GDP in 2023. Public debt stood at 80.2% of GDP that year and 84.3% in 2024, and counting the debt of public companies takes it past 90%.

Why the banks lend to the state first

The national banks have become the state's main lenders. Public debt made up 20.7% of the banking system's assets and 73% of its capital base in 2023, and public companies owed 7.2 billion dollars, 2.6 billion of it to national banks. Gross non-performing loans stood at 15.6% at the end of 2023.

The state owns three of the five largest banks, and public banks hold 36% of the market. Five industrial groups that account for 60% of national turnover control the largest private banks and enjoy preferential access to their credit: the Poulina, Loukil, Amen, Mzabi and Hédi Bouchamaoui groups. In the World Bank's Enterprise Survey of 2020, companies of every size named access to finance as their main constraint. Gross fixed capital formation fell from 26% of GDP in 2010 to 15.9% in 2023, according to an OECD report of 2024.

How Tunisia borrowed under the beys and after

In the 1860s Mustapha Khaznadar, prime minister and minister of finance to the bey, spent on infrastructure, communications and the army, and the economy could not pay for it. Only a fifth of the revenue reached the treasury, and accords with foreign traders dating from the 16th century held customs duties to 3% of the value of imports. Khaznadar doubled taxes in 1861, and by 1864 the countryside was in insurrection. In 1867 revenue no longer covered the annual interest on the national debt. Two years later France, Italy and Britain set up an international finance commission to safeguard Western interests, and French troops landed at Bizerte in May 1881.

After independence on 20 March 1956 the state promoted light industry and tourism and developed the phosphate deposits. In 1964 the planning minister, Ahmed Ben Salah, drew up a state-led plan for agricultural cooperatives and public-sector industry; he was dismissed in 1970. Oil production had begun in 1966, and GDP per head rose from 280 dollars in 1970 to 1,369 dollars in 1980, then only to 1,507 dollars by 1990.

Since the 1970s, food prices have been the point where the state, its creditors and the unions meet. The general strike of 1978 was put down with dozens killed. In 1983 the government, under pressure from the IMF, raised the price of bread and semolina, and riots followed; in 1985 further IMF cuts to subsidies brought more protests. A foreign-exchange crisis led in 1986 to a structural adjustment programme that freed prices and cut tariffs, and a privatisation programme launched in 1987 sold all or part of around 160 state enterprises.

The record holds two readings of that programme. International financial institutions praised it as a model; Britannica notes that unemployment and poverty rose while gross national product per head kept growing. In September 2013, with the constituent assembly suspended, the IMF held back a loan package of 1.7 billion dollars and released 500 million of it only after an interim government took office. Critics of the settlement brokered by the National Dialogue Quartet describe IMF involvement as foreign, technocratic control arriving just as Tunisians had won agency of their own.

What Tunisia makes for European buyers

Tunisia signed an Association Agreement with the European Union in July 1995 and began dismantling tariffs on trade with the EU before the agreement came into force. The tariffs on industrial products were gone by 2008. In 2023 the EU took 72% of Tunisian exports and supplied 43.8% of imports. The industry built for that market makes clothing and footwear, car parts and electrical machinery, and the World Bank counted a recovery in mechanical and electrical industries among the sources of growth in 2025.

Foreign capital works under two sets of rules. A foreign company selling into the domestic market generally needs government authorisation, must take a local partner, usually one with market power, and faces central bank limits on taking capital out. Those constraints are much less stringent for companies that produce only or almost only for export. The dinar itself is not traded outside Tunisia and is partially convertible for bona fide commercial and investment transactions. A draft law to liberalise foreign exchange was rejected at the end of 2024, after the finance minister argued that it would feed the parallel currency market and push the dinar lower.

Farm produce stayed outside the 1995 agreement, because the EU was reluctant to open its single market to outside competition in agriculture. Negotiations on a Deep and Comprehensive Free Trade Agreement began in 2016, and the draft liberalised agricultural trade, which Tunisia had asked for. It was never ratified. In Tunisia, concerns about the competitiveness of the food industries and opposition from the UGTT held it back; in the EU, olive oil producers in the south mobilised to block it. Tunisia's simple average most-favoured-nation tariff in 2023 was 19.5%, with 30.3% on agricultural products.

The other market close at hand is Libya, where Tunisian exports grew by more than 18% between 2020 and 2024.

Why phosphate output depends on the Gafsa basin

Phosphate mines began operating near Gafsa under the French protectorate. The Gafsa Basin accounts for more than 90% of Tunisian phosphate rock production, and its mines belong to the state-owned Compagnie des phosphates de Gafsa (CPG), whose subsidiary, the Groupe chimique Tunisien (GCT), makes phosphate fertilisers. The Natural Resource Governance Institute, citing Le Monde in October 2020, put the sector at around 4% of GDP and 15% of exports.

Protest has halted production more than once. Hundreds of unemployed demonstrators who took to the streets of Gafsa in 2008 were jailed, and on 28 December 2010, eleven days after Sidi Bouzid, a labour union rally in the town was blocked by security forces. NRGI describes a recurring pattern of protests and production blockades by citizens angry at corruption and a lack of transparency in the industry. In April 2023 the president announced an initiative to give phosphate production priority and to combat corruption inside CPG.

The rock now has uses beyond fertiliser. Lithium ferro phosphate batteries use it, and the European Commission lists phosphate rock among 20 critical raw materials. Some of the deposits that match Gafsa's reserves in quantity lie at Sra Ouertane in the Northern Basin, unexploited and alongside rare earth elements.

The same European market now prices the carbon in fertiliser. The first phase of the EU's Carbon Border Adjustment Mechanism, in force since 2023, puts a tariff on energy-intensive imports including fertilisers, ammonia, steel and cement, and initial estimates expected heavy industry in Tunisia, Morocco and Egypt to be hit. NRGI argues that GCT has to cut the carbon footprint of its products to stay competitive, and points to green ammonia made from hydrogen produced with renewable electricity.

How rain decides the olive and grain harvests

The Sahel, the coastal plain of the east, is olive country, and the humid plain between the Gulf of Hammamet and the Gulf of Gabès carries the olive plantations. Tunisia produced 825,000 tonnes of olives in 2018, beside 1.5 million tonnes of wheat.

The oil harvest moves with the rain. In October 2025 producers forecast up to 500,000 tonnes of olive oil for the 2025/26 season, about 50% more than the season before, mainly because the rains came at the right time. The benchmark was the 2019/20 campaign, put at around 440,000 tonnes by the International Olive Council. Most of the oil leaves in bulk. The bottled and branded share stays modest, which limits what producers earn.

Grain comes above all from the Majardah valley, once the granary of Rome, and Tunisia still imports cereals, meat and dairy products. Britannica puts low yields down partly to holdings divided into small plots and to outdated farming methods. Off the farms, the fishing fleet of Sfax lands sardines, mackerel and cuttlefish, and esparto grass from the plains goes into quality paper.

Water sets the limit on all of it. The World Bank's economic monitor of September 2026 puts renewable freshwater at about 380 cubic metres per person a year, below the international threshold for absolute water scarcity, and estimates that scarcity could cut GDP by 6.4% by 2050. Agriculture employs 14% of the national workforce and up to half of rural workers, and without action at least 30% of farm jobs could disappear by mid-century.

In the dry years the state rationed. SONEDE, the national water supply company, announced night-time cuts in March 2023, restrictions on farm use ran well into 2024 and reached the export sector, and the price of drinking water rose by 16% in March 2024. Activists and the United Nations special rapporteur on the right to water have said that supply went to industry and agribusiness at the expense of households.

What tourism earned before and after the attacks

Tourism was the main source of foreign exchange by 1962, when 52,000 arrivals and 4,000 beds brought in two million dollars. The Seventh National Development Plan of 1989 opened new resort areas such as Port El Kantaoui, and in 2009 tourism accounted for 7% of GDP and 370,000 jobs. Its traditional markets are France, Germany, Italy and the United Kingdom, and more than 95% of beds stand on the east coast. Much of the work is seasonal.

The attacks of 2015 on the Bardo National Museum and at Sousse collapsed the trade. Tourist workers in Tunis said after the Bardo attack that "tourism is dead, it is completely dead". Arrivals came back to 8.3 million in 2018, 6% more than in 2010. Then the COVID-19 pandemic cut tourism earnings by 60% in 2020, to 563 million dollars, and hit hardest the people in precarious work in tourism and the informal sector.

The Ministry of Tourism announced that arrivals in 2025 had passed 11 million by 22 December. The announcement came at a ceremony for Tounes Lik, a national tourist office campaign for domestic tourism built around land, sea, stone and desert, which also launched work on a programme for Tunis as capital of Arab tourism in 2027.

Where Tunisians find work and where they do not

Unemployment was 15.2% of the labour force in the first quarter of 2014, 15.11% in 2023 and 14.9% in the second quarter of 2026. For women it was 21.6% in that quarter, nearly twice the rate for men, though 34.3% of women had advanced education in 2023 against 14.9% of men and women made up 44% of engineers. Unemployment among university graduates reached 25% in 2024, and an association of unemployed graduates, the Union des Diplômés Chômeurs, campaigns for work for the young and for the interior and the south.

How the coast and the interior divide

In 2021, 24.8% of the rural population lived below the national poverty line, against 12.7% in towns. The rate was 4.7% in Grand Tunis and 37% in the centre-west. Siliana, in the north-west, recorded unemployment of 20.5% in 2024 against a national average of 16%. BTI traces the gap to the economic dynamism of the coastal cities and to differences in public services, with rural areas historically given less attention by governments in Tunis.

Sidi Bouzid shows the gap inside one region. The geographer Habib Ayeb says the region "received the most investment between 1990 and 2011" and became "in less than 30 years the premier agricultural region of the country", and that "These are people from Sfax and the Sahel who get rich in Sidi Bouzid, not the people of Sidi Bouzid." Mohamed Bouazizi sold produce from a cart there for seven years. On 17 December 2010 a city employee confiscated the cart and its produce, and the fine he tried to pay was 10 dinars, a day's wages, about 3 dollars. His self-immolation that day began the protests that ended the Ben Ali government on 14 January 2011, which the history of Tunisia follows.

Why most firms stay very small

According to World Bank figures in BTI's 2026 report, 86% of Tunisian firms are one-person enterprises, while firms with more than 100 workers, 0.4% of the total, provide more than a third of the jobs. The informal sector accounted for 43.9% of the economy on World Bank data for 2023 and 36.9% of employment on ILO data for 2019. Small and medium-sized firms are squeezed between informal competitors on one side and sectors closed to entry by large private and public companies on the other. State-owned enterprises produce about 13% of GDP and 4% of employment, and their debt reached 14% of GDP in 2023.

Why imported energy decides the external account

Oil production began in 1966, and El Borma is the main field. Crude output was 29,200 barrels a day at the end of September 2024. Natural gas, most of it imported from Algeria, generates 97% of Tunisian electricity, and the state utility STEG controls 92.1% of installed capacity, which stood at 5,944 MW in 25 power plants in 2024.

The Solar Plan of 2012 set a target of 30% renewable electricity by 2030, and the share has stayed at 3%. BTI attributes the delay in part to resistance from the UGTT and STEG to private electricity production and to constant changes of minister. In June 2023 the World Bank lent 268.4 million dollars for ELMED, a 600 MW undersea cable linking the Tunisian grid to Sicily and Italy. In July 2026 several regional grids failed, with temperatures above 49 °C, forest fires damaging cables and substations, and demand beyond what the country's plants could generate.

The central bank links the pressure on the external accounts to energy prices. Energy imports came to 11.3 billion dinars in the first eight months of 2026, against 8.8 billion dinars a year earlier, and the current account deficit widened to 4.694 billion dinars, or 2.5% of GDP, from 2.724 billion dinars, or 1.6%. The central bank's board held its policy rate at 7% in October 2026.

Reserves a year earlier had stood at 24.3 billion dinars, or 104 days of imports. Growth slowed in the second quarter of 2026 from 2.6% in the first, with a marked fall in industrial activity. The World Bank projects 2.3% growth for 2026, and the IMF's World Economic Outlook of October 2026 projects 2.4% growth and 5.5% inflation for the year.