Tunisia plans to tax the wealthiest

President Kais Saied of Tunisia has proposed implementing a tax on the country’s wealthiest citizens as an alternative to adhering to the conditions set by the International Monetary Fund (IMF). Talks between Tunisia and the IMF have been at a standstill for months due to disagreements over the restructuring of public institutions and the removal of subsidies on essential goods. In a meeting with Prime Minister Najla Bouden, President Saied suggested the idea of redistributing surplus funds from the rich to the poor, drawing inspiration from a quote attributed to Omar Ibn Al-Khattab, the second caliph of Islam. He argued that this approach would enable the country to avoid bowing down to foreign lenders.

Tunisian Finance Minister Siham Nemsieh warned that failure to repay the loans would result in the state’s bankruptcy. In the meantime, Tunisia’s parliament approved an agreement for a $500 million loan from the African Export-Import Bank. The agreement received 126 votes in favour out of 154. During the session, Minister Nemsieh highlighted that borrowing became necessary due to external factors such as the COVID-19 pandemic and the war in Ukraine. According to data presented by the ministry, Tunisia’s debt stood at approximately $37 billion by the end of 2022, accounting for 79.9% of the country’s gross domestic product.

The poorest segments of the population have been disproportionately affected by high inflation and the global rise in food prices. The United Nations’ financial agency has called for the restructuring of over 100 state-owned companies, many of which hold monopolies in various sectors and carry substantial debts. Tunisia is grappling with a financial crisis characterised by severe shortages of basic food products, while political tensions have remained high since President Saied seized broad powers in July 2021. Official figures indicate that inflation reached around 10.01% in May, and unemployment rose to 16.1% in the first quarter of this year, compared to 15.2% in the fourth quarter of 2022.

Despite previous IMF loan deals in 2013 and 2016, which amounted to $1.7 billion and $2.8 billion, respectively, Tunisia’s public finances have yet to see significant improvement. The country has endured a decade of economic stagnation since the revolution that ousted long-time ruler Zine El Abidine Ben Ali in early 2011.