Sat on the side of the plate again!

Once again the head of state is off the mark, one wonders what his advisors are doing. For him, the import of luxury goods is actually behind the imbalance in the balance of trade with a certain number of countries, which is likely to harm public finances. In its range for pet food or beauty products from the biggest cosmetic houses. But that is not true. Worse, the luxury sector is a supplier of jobs and revenue to the state. Explanations.

The trade balance deficit worsened by 61.25% for the first eight months of 2022. It stood at -16.899 million dinars (MD) at the end of August 2022 against -10.480 MD a year earlier, citing figures published by the National Institute of Statistics (INS).

According to the same source, the majority of this deficit is due to the imbalance between imports and exports of raw materials and semi-finished products. It represents 38.95% of the total deficit. Then we have the energy deficit which monopolizes 35.71% of the total deficit and then the food deficit which represents 12.74% of the total deficit. These three expenditure areas alone account for 87.74% of the total deficit.

Thus, it appears that the impact of the import of luxury goods is not as great as claimed by the head of state or as put forward by the members of the Harak of July 25, stating figures that seem important but are insignificant in comparison with the total deficit and the state budget.

You should know that financial interest sometimes takes precedence over certain other goals. We must be aware that the luxury sector is a supplier of jobs and income to the state. Eg. the cosmetics and perfume sales sector, targeted by the head of state, employs young people and women, who are well paid compared to other sectors. The same applies to pet stores. Even better, with luxury products the government is bailing out its coffers, with taxes going up to 320% on certain products.

It also makes it possible to guarantee social equality, which is dear to the head of state’s heart. The more the range of the product increases, the more it is taxed.

For example, the kilo of pasta benefits from compensation, so the government pays to deliver this item to Tunisians. However, a kilo of imported pasta does not benefit from the compensation, on the contrary, it gives the state the opportunity to obtain additional income and fill part of the compensation. This is valid for all luxury products imported or not, the state is a 100% winner.

It is also what the state itself does. For example, and with sugar monopoly, the Trade Office sells it to citizens with compensation and to industrialists with a profit, which theoretically makes it possible to reduce the Office’s deficit.

There is also an invisible part in the iceberg. The sector includes importers, freight forwarders, transporters, small businesses scattered throughout the territory and even housewives who sell certain cosmetic products (catalogue sales driven by several brands) to supplement their ends of the month. Other sectors will be indirectly affected, especially the banking and insurance sectors.

Suppose the government bans or significantly reduces the import of luxury goods, what will happen? It will simply benefit the parallel market. It is systematic, every time the state has put pressure on the official sector, the informal sector has benefited and filled its pockets. Worse, the state will be deprived of the revenues it collected when it needs them in these times of crisis. Of course, businesses close and employees are laid off.

So why these shortages and the repeated lack of supply? Quite simply because the state lacks resources and foreign suppliers no longer trust Tunisia and demand immediate payment. It should be remembered that the 2022 finance law was built on the assumption of reaching an agreement with the International Monetary Fund (IMF) before the end of the first quarter. And then the state needs these funds to close the 2022 budget.

Thus, and due to delays in payments to its Tunisian and foreign suppliers, Tunisia is no longer solvent. Now 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 fuel imports, 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 oil imports, 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.

On many occasions the government had to resort to the safety stock of fuel, milk etc.

On the Tunisian supplier side, several sectors are hard hit by the lack of supply (oil producers, soft drink industries, biscuit industries, etc.) and others are victims of unpaid bills Government or non-increased margins such as , bakers, gas station owners, etc.

Concretely, stopping the import of perfume and animal products or luxury products does not solve anything. Tunisia suffers from structural problems. On the contrary, its only support today is the private sector, which somehow tries to push the locomotive of the economy despite all the obstacles of the state. To attack him is to bring the country to its knees.

To revive the economic machine and with the weight of the public sector and its shortcomings, the government must remove the obstacles for the private sector so that it can create wealth and employment. That said, sooner or later he will have to tackle the country’s real problems: restructuring public enterprises, reducing wage costs and working to better manage compensation.

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 needs to control its spending and direct it towards improving living conditions (infrastructure, education, health, etc.) and no longer content itself with paying salaries and covering the deficit in the deficit of 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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