Almost every country in the world has been caught by surprise by the phenomenal rise in commodity prices, raw materials and oil prices, which have generated record inflation not seen in decades and unforeseen extra expenses. In Tunisia, the preliminary results of the implementation of the state budget at the end of June 2022 show a decrease in the deficit. Watered-down figures that do not reflect the reality of the country’s economic situation.
According to the preliminary results of the implementation of the state budget, the budget deficit decreased by 75.23% in the first half of 2022, from -1,900.9 million dinars (MD) at the end of June 2021 to – 470.8 million dinars at the end of June 2022. Government revenues increased by 22.16% for this period, rising from 15,818 MD to 19,323.3 MD. Expenditures increased at a slower pace of 7.69% and reached 18,980.7 MD against 17,624.6 MD for the same period last year.
Commenting on the budget deficit, Doctor of Economics, University of Carthage teacher-researcher and expert-consultant, Aram Belhadj, in a statement to Business News, estimated that the figure shown is ” amazing because the expected deficit according to the Finance Act 2022 is MD 9,308 over the whole year. Therefore, the deficit should have been at least half of this figure, i.e. 4,650 MD. However, it is only 470 MD at the end of June 2022.
Sir. Belhadj affirmed in this context: ” Then questions arise. Has the situation of public finances miraculously improved, making it possible to achieve a minimal budget deficit? The answer is no! So what explains this number? Two things explain this result. First, the pace of revenue growth is good: out of the 38,618 MD of revenue stipulated in the Finance Act of 2022, 19,323.3 MD has been collected. The government is therefore collecting tax and non-tax revenue normally, which is a good thing. That said, it should not be forgotten that this refund includes the extraordinary receipts resulting from the tax amnesty. Second, the slow pace of expenditure execution has affected the deficit. Thus, we note that for intervention expenses, which include payment of suppliers and compensation, out of the 14,267.3 MD provided for in the Finance Act of 2022, only 4,051.9 MD was made at the end of June 2022. Ditto for investment expenditure, out of the planned 4,183.2 MD, 1,520.2 MD was executed “.
And remember that the deficit comes from deducting expenses from revenues without taking into account donations, privatization revenues or confiscations.
The conclusion for him is that the state does not realize the planned expenses. He doesn’t pay the suppliers, he only pays the compensation, and he usually collects the revenue.
” The repercussions of this strategy will be revealed later as the pace of expenditure execution is expected to accelerate while the pace of revenue collection remains normal. This will create a big problem, especially since there is no agreement with the International Monetary Fund (IMF), while the 2022 Finance Act was built on the assumption of an agreement with the financial institution.
The current deficit does not reflect a good situation for public finances, but quite the opposite. The problems are likely to worsen by the end of this year “, he hammered.
Attayar’s deputy and leader, Hichem Ajbouni, continues in the same spirit and commented on the official figures in a Facebook post. He thus points out that if we counted the donations of 813 MD to the Tunisian state, we would have a budget surplus of 343 MD. And to remember that the expected deficit of more than 9 billion dinars had not taken into account the new pressure on the state budget, which comes from the increase in the price of a barrel of oil, the price of grain, the decrease in growth also as the dinar’s slide over for the dollar.
Furthermore, the income from the tax amnesty should have been specified in order to be able to compare the figures.
The politician pointed out that if the state does not pay or delays the payment of its debts, suppliers, promoters, compensation and transfers, it is normal for the budget deficit to decrease and it is possible to achieve a surplus. And to state that if the deficit had taken into account the consequences of price increases on a global scale, it would have been more significant!
And to wonder: What is the Saïed government waiting for the publication of an amendment to the finance law, which takes into account the change in prerequisites, in particular the lack of an agreement with the IMF, and which would make it possible to reveal the reality of the public’s situation economy?? ».
But how can this budget deficit be concretely explained? The Secretary of State, Mustapha Mezghani explained this “ so-called performance which is a counter-performance ”, which responds to the euphoria of some Internet users at the publication of the figures.
And to point it out the main reason for this reduction of the budget deficit is not an improvement in budget revenues, but a decrease in payments, and this decrease in payments is not due to voluntary budget restrictions, but to non-payment by suppliers from the state. “.
And to highlight the relationship between this performance with:
- the numerous shortages of basic products that the state imports (oil products, grains, coffee, sugar, etc.)
- the many boats in the harbor for non-payment by foreign suppliers
- the financial difficulties encountered by the many Tunisian companies that supply the state
- lack of medicine, difficulties in hospitals, CNAM, etc.
- the state’s inability to borrow on the international market
- the state’s inability to raise more debt on the local market
- the actual absence of investment from the state and the realization of section 2 of the budget
Mr. Mezghani took the opportunity to remind that ” A few years ago, a finance minister had left a big blackboard with contractors and other local suppliers and had refused to pay debts to the Central Pharmacy to enable it to import medicine (to mention only these two cases) to limit the budget deficit at the end of the year “. Facts that don’t go back that far.
This budget is only the tip of the iceberg and the untruths that are served to Tunisians on a daily basis. It does not reflect the true economic situation of the country and hides the truth from the citizens.
The seriousness of the situation is such that foreign suppliers refuse to serve us until payment. Meanwhile, Tunisians are experiencing major financial problems due to late payments, and some are in danger, on the verge of bankruptcy or have filed for bankruptcy. This is the case for several construction companies.
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.
We should also remember the case of the dismissal last July of the cargo of soybean oil, which was not in accordance with the Department of Commerce. Something that had been rejected by the Alert association, which assured on Thursday, July 21, 2022, that the compliance tests are carried out before the loading of the cargo by an independent company by agreement between the two parties, but that it is the lack of resources of the state that derailed the transaction.
In this context, it is also necessary to mention the failure to pay the compensation or the failure to increase the margins. 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.
Worse, the president of the Union of Farmers of Tunisia (Synagri), Maidani Dhaoui, claimed that 35% of the herd of dairy cows were sold to smugglers or butchers. This has led to a reduction of our strategic milk stock from 50 million liters to 20 million litres, knowing that the daily consumption is around 1.5 million liters (ie a stock of less than 14 days’ consumption).
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 part of the bakers’ quota 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.
In this context, it should also be mentioned that the shortage has affected the industrial sector, which has come to a standstill. For example, two SFBT subsidiaries stopped production due to lack of sugar: SGBIA for two days and STBG for one day. Ditto for the Saïda biscuit factory. Several employees at the aforementioned factories were thus on technical unemployment, and employees demonstrated in front of the headquarters of the governorate of Ben Arous to denounce the seriousness of the situation. Also the lack of coffee, sugar, mineral water etc. disrupted the operation of cafes and tea rooms. But the most serious supply interruption is the fuel disruption which has been going on for several weeks and which has caused loss of time but also financial loss, especially for non-regular transport (louages, taxis, collective taxis) but also for the transport of goods that each has to go to several gas stations to find fuel and then have to stand in long queues. All of this naturally leads to a drop in productivity, therefore a drop in growth and, above all, a drop in revenue for the state.
The fall in the budget deficit is a gross untruth. It reflects a serious crisis in public finances and the state’s inability to meet all its obligations, which is particularly reflected in the various deficiencies observed. Worse, a large majority of the companies that work with the state are at risk. Ditto for several parts of the economy.
Finding an agreement with the IMF is becoming urgent and crucial to securing the necessary resources for the state to function properly. Something that cannot be done without the commitment to structural reforms, a difficult issue that has been blocked for years.