Shortage, what the government will not admit

The situation is serious, but we act as if everything is fine. While inflation is in full swing and several countries are in limbo – despite their means – in Tunisia, people prefer to deflect the truth and minimize the facts. But as a Tunisian proverb goes so well: “you can’t hide the sun with a sieve”, and the lack of various products and foodstuffs is an unequivocal testimony to the real situation in the country.

Since 2021, the country has been living under the rhythm of repeated shortages affecting various products and foodstuffs. Something that has never happened in recent years, despite all the crises that the country has experienced. Today, supply interruptions and shortages have become the Tunisian’s daily bread. And the crisis has hit the industrial sector, which has come to a standstill. For example, the subsidiary of SFBT soft drinks had closed its doors due to a lack of sugar. Ditto for the Saïda biscuit factory. Several employees were thus on technical unemployment. Also the lack of coffee, sugar, mineral water etc. disrupted the operation of cafes and tea rooms. The interruption of the fuel supply, which has lasted for a few weeks, is causing loss of time and financial losses.

Many mistakenly believe that the government made a mistake in drafting its 2022 Finance Bill, regarding the assumption that the average price per barrel would not exceed 75 dollars per barrel Brent. But actually the exchange rate assumptions surprised everyone and the even parity between the euro and the dollar changes the situation. Another important fact, the rise in commodity prices, and food in particular, has destabilized the most powerful countries. Hence record inflation worldwide. Tunisia, like all the other countries, suffers from these increases, which are very far from the country’s forecasts and are therefore not budgeted for.

In fact, the prices of the majority of consumer products have more than doubled in these five years, and since the beginning of 2021, the price increases have been in double digits, sometimes reaching 20 and 25%.

At the same time and even before the war in Ukraine, it was already announced that it would be difficult to close the budget, as the government had not found an agreement with the International Monetary Fund, the tap for international loans and aid. Now the state’s finances are probably worse. To be sure, the loans and food aid received from certain financial institutions and certain friendly states have to some extent remedied the shortage. But since August 2022, things have become tougher, and Tunisians have discovered with astonishment the true situation of the country, despite the various denials from the authorities. Coffee, butter, juice, soft drinks, mineral water, sugar, rice, fuel … the supply problems now affect various products, only those imported by the state (the others, although the prices have increased significantly, are still available) , and the government can no longer hide it, but continues to hide the country’s economic situation.

The day before, Sunday, August 29, 2022, Industry, Energy and Mines Minister Neila Nouira Gongi confirmed that the fuel shortage is due to suppliers wanting to be paid in advance, but that the procedures take time and it has become a worldwide phenomenon. In addition to alleging logistical issues related to Ticad 8.

The truth is that Tunisia is no longer solvent due to delays in payments to its Tunisian and foreign suppliers. From now on, suppliers ask to be paid before delivering the goods to guarantee their payment. In fact, several companies and public organizations with import monopolies are in the spotlight. This is the case of Stir, which has a monopoly on the import of fuel, the Tunisian Office of Commerce (OCT), which has a monopoly on the import of basic products (sugar, coffee, tea, …), the National Oil Office, which has a monopoly on the import of oil, The Kornkontoret, which has a monopoly on grain imports, the Central Pharmacy, which has a monopoly on importing medicines, … . From now on, their suppliers require all deliveries to be made in cash.

An oil expert said last week that “there are boats in the ports of Tunis, Bizerte, and Skhira, but they refuse to deliver until Stir pays and that the banks had refused to advance Stir the necessary credits. Something that a fortnight ago had indicated that the General Federation of Petroleum and Chemical Products, under the Tunisian General Labor Union (UGTT), had specified that two oil tankers had arrived at the port of Bizerte on August 3, 2022. The state was able to carry out on 10 August the financial settlement of the first load of unleaded petrol, which could therefore be unloaded, but could not do so for the second load, which is still lying at the quay in Bizerte.

Better, the union had admitted that the government had to resort to the safety stock, which has been falling since June 2022.

The country’s economic problems affect not only external suppliers, but also domestic suppliers. Late payments pile up, and some companies have paid the price: they find themselves in a vicious circle where bankruptcy is often the only way out. These companies are thus no longer paid, can no longer pay taxes and social contributions, and because of this the state no longer pays them in return. For example, several construction companies were put at risk and some had to file for bankruptcy.

Others suffer from non-payment of compensation. While some sectors have delayed wage increases, others are in a very difficult situation and directly at risk.

This is the case of the dairy sector, where the state has not paid the compensation to the industrialists for thirteen months, fourteen after counting the month of July 2022. Today, the state owes the four factories that remain of the eight that existed, 260 million dinars until the end of ​​June 2022. This forced the industrialists to resort to loans to fill this influx of missing cash, but they have reached the limits of their borrowing capacity.

Same for bakers. They had decided not to raise their employees who had not received their dues from the Compensation Fund for more than 12 months. And the strike was narrowly averted, thanks to the Ministry of Trade and Export Development’s promise to pay some of the bakers’ dues from the Compensation Fund. The same applies to the gas stations that refuse to sign the endorsement of the wage increase. The government did not increase their profit margin. Out of the five consecutive fuel price hikes since 2021, no increase in kiosk gross profit has been achieved. Their margin thus fell from 4.5% to 3.3%, i.e. a deficit of 21 millimeters per litres. However, the professionals are only asking for an increase of 6.5 millimeters, to be able to cope with the various increases they have faced and to cope with the next salary increase for their employees.

The state has just opened subscriptions for the third tranche of the national bond loan in 2022 to mobilize an amount of 350 million dinars. In fact, the funds collected at the national level are far from sufficient, and every month short-term debts must be incurred with local banks to pay salaries to the public service. No longer able to cover his expenses, he delays paying his suppliers and goes into debt with exorbitant short-term interest to pay wages. So it favors consumption over production and hurts its suppliers who find themselves in difficult situations.

An untenable situation. Since the revolution, the state has become a fireman, dealing only with declared fires. Today this must stop. The country has its back against the wall and must carry out the necessary reforms to save the country. It is no longer a choice, but an imperative, not dictated by the IMF or any other body or country, but only by common sense. Tunisia must control its spending and direct it towards improving living conditions (infrastructure, education, health, etc.) and no longer settle for paying salaries and making up the deficit in loss-making public enterprises. The country needs more than ever to initiate structural reforms and introduce a strategic plan that allows the change of the economic model. This will make it possible to drain the necessary funding for this course change, for a better Tunisia.

Meanwhile NOUIRA

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