Skip to content Skip to Search
Skip navigation

World Bank drops growth forecast for Tunisia further

Drought in Tunisia is a hurdle recognised by the World Bank Reuters
A worker waters drought-stricken trees in Tunisia. The World Bank sees the drought as one of the factors affecting GDP growth
  • Growth forecast down to 1.2%
  • Finances ‘fragile’ without IMF deal
  • Tunisia paid 74% of external debt

Tunisia’s economic growth forecast has been downgraded further by the World Bank amid concerns over the drought-hit agricultural sector, as well as uncertainties over debt financing and the weak momentum of structural reforms.

In its report, Balancing act: Jobs and wages in the Middle East and North Africa when crises hit, the World Bank noted that the Tunisian economy appears to be slowing “significantly” compared with trends in 2021 and 2022.

As a result, its growth forecast for the North African country has dropped to 1.2 percent for 2023, down from a preliminary estimate of 2.3 percent in June. The World Bank cites “very uncertain prospects”.

The bank previously revised its growth projections down by 1 percent for this year.

In the absence of agreements with the IMF and external financing, coupled with an uncertain global environment, Tunisia’s public finances and external accounts will remain “fragile”, the World Bank said.

Bailout talks with the IMF have stalled since last October, when a preliminary agreement for a 48-month loan worth close to $2 billion was reached.

Tunisian president Kais Saied’s government refused to accept the terms of the proposed deal, which fuelled speculation over an imminent default on the country’s debt.

The budget deficit is expected to narrow to 5.6 percent of GDP this year, down from 6.6 percent last year, according to the World Bank, as a result of the reduction in energy subsidies, lower real wages and an increase in tax revenues.

However, the bank predicts that gross financing needs will increase further to 16 percent of GDP in 2023, from 12.6 percent in 2022, “due to significant external debt repayments”.

Debt and deficit

It was revealed last month that Tunisia had repaid 74 percent of its cumulative external debt due this year.

As of September 10, the amount of debt repaid was TND6.6 billion ($2 billion), compared with TND8.9 billion forecast for the year in the 2023 budget, as reported by Agence Tunis Afrique Presse, citing data from the country’s central bank.

The current account deficit is projected to narrow to 4 percent of GDP in 2023 – from 8.6 percent in 2022 – thanks to tourism and favourable terms of trade.

“If Tunisia manages to overcome the drought and difficulties in external financing, it should reach a growth rate of 3 percent in 2024 and 2025,” the report said.

Saudi Arabia in July announced it would provide Tunisia with $400 million as a soft loan – one with no interest or a below-market rate – and $100 million as a grant. 

Riyadh has pledged more financial support in the near future but this has yet to materialise.

Latest articles

The WakeCap system being used on a construction site

Aramco adopts heat-sensing construction helmets

Saudi Aramco is deploying advanced safety helmets equipped with heat stress sensors to protect workers on some of its construction sites, a critical concern in the Gulf region’s scorching climate. The helmets, developed by Dubai and Saudi Arabia-based construction tech startup WakeCap, utilise internet-of-things (IoT) technology that monitors worker attendance, location, and safety incidents in […]

Wind turbines above the village of Kotronas in the Peloponnese region. Greece's Terna Energy invests in wind, solar, hydroelectric and pumped storage projects

Masdar buys Greece’s biggest investor in renewables

The UAE’s state-owned clean energy company Masdar is to acquire a majority share in Terna Energy of Greece. The initial deal – one of the largest in the European renewables market and the biggest ever energy transaction on the Athens Stock Exchange – is for a 67 percent stake. The price of €20 ($21.45) per […]

KBR Iraq

US firm wins $46m contract to boost Iraq infrastructure 

US engineering giant KBR has won a five-year $46 million contract to support Iraq’s infrastructure development and future energy projects, including mega-projects. The company is expanding its presence in Iraq, establishing a new office in Baghdad and said it is also considering the creation of a design centre to enhance local engineering skills. Under the […]

People walk through the souk in Manama, Bahrain; FDI has been encouraged by the golden licence programme for investors

Bahrain attracts a record $6.8bn in foreign investment

Bahrain has set a new record by attracting $6.8 billion in foreign direct investment (FDI) in 2023. This is a 148 percent increase from the previous year’s $2.8 billion, according to the latest World Investment Report by the UN Conference on Trade and Development. Kuwait emerged as the top contributor, accounting for 36 percent of […]