Is Tunisia on the verge of bankruptcy due to the tensions and the Corona crisis?

Tunisia is facing its darkest period since the 2011 revolution, as it suffers due to its political crisis associated with the global crisis of the Coronavirus, confusing financial and economic difficulties that make it on the path of bankruptcy, according to senior officials familiar with its financial position in the government of Elias, the resigned traps.

On August 15, the economic indicators published by the Tunisian Institute of Statistics were the most conclusive evidence of the country entering a dark tunnel of economic collapse. In the second third of the current year, the level of economic growth reached its lowest historical level, recording 21.6% - (negative).

At a time when the country is suffering from financial and economic deterioration and a social explosion fueled by sit-ins and cutting off the production of phosphates (phosphates) and energy, Tunisia has lived under the brunt of a political crisis that disrupted the normal functioning of the state as a result of conflicts between the head of state and the speaker of parliament, and between the head of state and the parties.

Risk of collapse

This blockage and lack of harmony between the heads of authority at a time when the Corona virus is making progress at the expense of public health has made the public finances of the Tunisian state on the edge of a precipice of bankruptcy and even collapse, according to the expression of the former Minister of State Property and Equipment Ghazi Chaouachi.

Chaouachi says to Al-Jazeera Net in an explicit statement that Tunisia is on the verge of bankruptcy and is threatened with economic collapse at a time when its emerging democratic experiment is running towards failure due to the accumulations of the dysfunctional financial situation and the global health crisis, especially as a result of the political tensions that have become without a ceiling.

Al-Shawashi believes that the Mishichi government (pictured) is running on a minefield (Al-Jazeera)

Based on official indicators, Chaouachi asserts that Tunisia is facing a harsh ordeal in paying the wages of employees and retirees due to the crisis of social funds, and he also says that it has postponed the implementation of many major projects due to its inability to pay the dues of infrastructure contractors such as bridges and roads.

This is nothing but a drop in the periphery of the financial deficit that hinders the Tunisian state from achieving what it pledged to do, as it is suffering under the weight of economic downturn and the lack of wealth creation, which made it unable to fulfill its promise to raise the wages agreed upon with the labor union last August.

Chaouachi does not hope for good in the coming period if the relationship between Tunisian President Qais Said, who opened fire on the Ennahda movement and its allies, continues to worsen, as well as the fragility of the government of Hicham El Mechichi, who is forced by blocs for fear of dissolving Parliament, warning of a near social explosion.

He says that the government of the Chechy, chosen by the President of the State, Qais Saeed, who was approved by Parliament last Tuesday, is running on a minefield that makes it unable to implement its rescue plan if the parties do not leave their differences aside and sit at a dialogue table to establish an indispensable political and social truce.

The Prime Minister, Hisham Al-Mashishi, during the session of granting confidence in Parliament last Tuesday, made a top priority in the work of his government to stop the bleeding of public financial imbalances, warning against the policy of debt with the outside, and pledging to improve the climate of confidence and investment and improve conditions.

The economic expert, Ezz El-Din Saeedan, warned of the risk of bankruptcy (Al-Jazeera)

The specter of bankruptcy

But the seriousness of the financial and economic situation, which Tunisia is suffering from before and after the Corona pandemic, is revealed by the expert Ezzedine Saedan, one of the economists who believes that the signs of the bankruptcy of the Tunisian state have loomed on the horizon due to the depth of the political differences and the failure of economic policies.

This expert does not base his pessimism on a void, but justifies his statement with the indicators of the Tunisian Institute of Statistics, as it is expected that growth during the first half of the current year will reach a negative rate of 12% compared to the same period last year, which is a catastrophic and unprecedented rate in the country's history.

Saeedan reproached the state for its inactivity of the political tensions at the expense of saving the stalled economy, pointing to the mismanagement of the Corona crisis on the economy due to the state’s failure to pump sufficient financial liquidity to banks in order to lend institutions and support their activities and spare them the risk of bankruptcy.

He tells Al-Jazeera Net that the repercussions of the Corona crisis on the economy in light of the government’s mismanagement of the crisis have caused the closure of hundreds of institutions and the loss of 161,000 jobs since last March, according to the numbers of the Tunisian Institute of Statistics, which created a shattered social scene on the crater of a volcano.

As for him, the Machichy government will face a frustrating dilemma due to the financial imbalance, the high volume of debt and the proximity of salvation dates, in the rest of 2020 Tunisia will be required to repay an external debt of 7.5 billion Tunisian dinars (2.7 billion dollars).

He says that the state’s total debt has reached a record level of 85% of the GDP, while the state’s debts to the private sector amounted to 800 million Tunisian dinars (293 million dollars), and unpaid public institutions debts amount to 6.2 billion Tunisian dinars (2.2 billion dollars).

A social truce

He affirms that all indications show that the country is on the path of bankruptcy as a result of entering into internal and external debt without being able to fulfill its obligations naturally, considering that a social and political truce is inevitable with the approval of a rescue plan to avoid the occurrence of catastrophe.

For his part, the economist Reda El-Shkandali says that there will be no bankruptcy in Tunisia, which means the inability of the state to provide wages for employees, but he agrees with the previous expert that there is external bankruptcy represented by Tunisia reaching a critical stage in its ability to meet the payment of its foreign debts.

He adds to Al-Jazeera Net that all indicators only indicate the existence of two solutions, which are irreplaceable, namely, that Tunisia will continue its borrowing policy or move towards addressing its political, social and economic weakness to restore its production, export and disruptive investment to create wealth.

He confirms that the political quarrels in the country had a worse impact than the Corona virus, due to the lack of confidence it generated among the heads of state institutions, indicating that the most prominent factors of the decline in investment in Tunisia is the state of uncertainty and the disruption of the business climate due to the political crisis.

He also criticized the policies of successive governments for adopting a policy of tax expansion, which created tax pressure on institutions that alienated investors, in addition to raising interest rates on loans that caused low consumption and investment, in addition to reducing the value of the dinar and weakening the financing of institutions.