English
Tunisia: Dynamics and Challenges of Sovereign Debt
by Amine Bouzaïene
Introduction
Debt sustainability, often invoked to justify austerity policies, must be redefined based on social and economic criteria rather than purely accounting ones. From a critical perspective, debt sustainability should not be understood merely as a state's ability to repay its creditors, but rather as its ability to fulfill its obligations to its population—particularly regarding social and economic rights. In the Tunisian context, this means assessing debt in light of its impact on inclusive growth, public investment, social justice, and economic sovereignty. Debt can only be considered sustainable if its servicing does not undermine the conditions for equitable and sustainable development.
Like other countries in the Global South, Tunisia is caught in the vicious cycle of austerity and debt. In 2023, the country's debt reached a record high, accounting for 83% of GDP, following two major external shocks: the COVID-19 pandemic and the Russian invasion of Ukraine, both of which severely impacted the national economy. Tunisia recorded a negative growth rate of 8.6% in 2020, coinciding with the health crisis, leading to a historic budget deficit of 10% of GDP,
Moreover, the war in Ukraine has significantly strained public finances, making it particularly challenging for the country to finance its budget, especially in foreign currencies. Tunisia subsidizes consumer prices for certain basic food products and energy, with an average annual cost of 4 billion dinars during the 2010-2020 decade.
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