Tunisia to start economic rescue plan, sees 7 pct growth in 5 years

Tunisia faces pressure from its creditors to cut public spending and reform politically sensitive subsidies

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Tunisia's new government will launch an emergency economic plan that includes reforms in subsidies and social funds to revive growth to a projected 7 per cent in five years, Tunisian Prime Minister Habib Essid said.

Tunisia has been praised as an example of compromise politics and democratic transition since overthrowing autocrat Zine El-Abidine Ben Ali in a 2011 uprising, holding free elections and drafting a new constitution.


But the North African country faces pressure from its creditors to cut public spending and reform politically sensitive subsidies on basic foods and fuel that are a hangover from the previous regime's statist policies.

Newly elected premier Habib Essid said in one his first national speeches that major projects, including roadway construction and a gas project in the south, will be launched soon to help create jobs, without giving details or timing of the developments.

Essid said the national budget deficit last year was about 7.5 billion dinars ($3.8 billion). He said the current deficit in state social funds, such the CNAM and CNRPS programs for health and pensions, was about 1.1 billion dinar.

"We will start a rescue program, we will start reforms in health, education, in state subsidies and in the social funds," the prime minister said in a late night broadcast on Monday.

Reform also include a government plan to lift the retirement age as a way to ease pressure on state pension payments. Last year, the government said Tunisia would raise the retirement age by two years to 62 in 2015.

But Tunisia's powerful UGTT labour union rejected it, and has resisted other reforms such as attempts to freeze public worker wage hikes as a way to curb public spending.

Tunisia this month cancelled a new tax imposed on travellers crossing Libya's border after the measure triggered rioting, highlighting the problems facing the government as it seeks to bolster shaky state accounts.

Essid said his government was planning a development scheme for 2016 to 2020 that targets growth of 7 percent.

Tunisia's economic reforms, including boosting development and jobs, will not be easy in a country which is reliant on tourism, has few natural resources, suffers from high unemployment and offers generous state subsidies.

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