News

In the framework of the imposed economic reforms, Tunisia raises the fuel prices without taking into account the working class people

2018-07-01

The Tunisian authorities decided on Friday night to raise the gasoline and fuel prices by 4 percent for the third time in the last six months as it has been raising prices twice in March and January, in this year.

The Tunisian Ministry of Energy, stated that partial adjustment was made to the public sale prices of some petroleum products to be as follows: "unleaded gasoline" “Super”: increased by 75 millimes to become: 1925 millimes.

The decision of Yousuf Al-Shahid's government comes as part of a reform package imposed by the International Monetary Fund (IMF) to make up the deficit of the Tunisian budget, where the government looks for reducing the deficit to 4.9 percent of the gross domestic product of this year, compared to about 6 percent in 2017.

Fuels and reform package

The Tunisia's fuel prices have risen by about 15.2 percent since the government’s agreement with the International Monetary Fund (IMF) in 2016 to implement an economic program that includes the cutting of subsidies and the rationalizing of the expenditure for $ 2.98 billion of funding over four years.

The International Monetary Fund said in its report "on the prospects of the economy 2018," that among the priorities of 2018 for Tunisia is to increase the tax revenue and raise the main rate of interest, as well as, to refrain from raising wages unless an unexpected rise in growth is achieved, in addition to the increase in the fuel prices every 3 months according to the global market.

The IMF Board of Governors required that Yousuf Al-Shahid's government has to implement the package of economic and social reforms as a condition for the release of the third part of the loan granted to Tunisia to face the economic crisis and budget deficit.

Accordingly, in “the Economic and Social Program of 2020: the Roadmap”, Yousuf Al-Shahid's government issued "arbitrary" decisions to implement the reform package of the International Monetary Fund (IMF) and the donor countries.

According to the provision about “the implementation of the automatic mechanism for the adjustment of the fuel prices "under the document, the amendment will be linked to the international market and will be "quarterly" i.e. every three months, which means that there will be another increase next September.

The former finance minister and economic expert said that the government would bow to the IMF pressure, in light of the suffocating economic crisis and the dinar's deterioration as a result of the rising of inflation rates of more than 7 percent.

He pointed out that "The third installment of the loan is necessary to ensure the balance of the state budget of 2018 based on a deficit of nearly 10 billion dinars, warning of the serious repercussions on the economy and public finance in case of not obtaining the loan.”

The deterioration of the supporting mechanism

Experts have warned of the new mechanism adopted by the government to raise "quarterly" the prices of fuel because of their direct relationship with the system of support for hydrocarbons and the intention of the government to abandon them completely in the coming years.

The Tunisians consider the support system as a red line, especially since support funds are one of the most fundamental gains of the country, since the 1940s. They are a real social value, and the mere thought of abandoning them from the social and economic scenes of the country, would spark the public opinion.

Although that the Minister of Reform confirmed in the beginning of this month, that the value of the state subsidies for fuel will rise in 2018 to about four thousand billion of the expected 1.5 thousand billion expected due to the rise of the oil prices in the world markets, the recent increases will affect badly the poor.

The amount of fuel subsidies in the Finance Act of 2018 is about 1500 million dinars based on the estimated price of a barrel of oil in the Finance Act, which is $ 54, according to the estimates of the competent institution. However, the oil prices in world markets amounted in the first months of this year about seventy dollars for a barrel to break these expectations.

It is expected that the recent decisions on the raising of fuel prices will affect badly the poor in Tunisia due to their impact on the prices of services and basic materials, such as electricity and public transport (ticket prices).

In the same context, an economist said that the increases in the prices of fuel will affect the prices of all the consumables and services, where he is expecting a rise in the price of all forms of transport (land, sea and air), in addition to the increase of food, which was already announced by the increases in the price of milk followed by other increases that may include the subsidized materials.

People are angry and the Union of Labour is warning

The recent increases in fuel prices sparked the outrage of people, especially as they coincided with the government statements on the delay of the public sector wage increases until next year.

Experts warned of a social explosion in Tunisia, as a result of the deteriorating purchasing power of the poor classes, who were the fuel of previous protests.

From its part, the Tunisian General Labour Union (UGTT) rejected most of the conditions of the International Monetary Fund, which will affect badly on the poor and middle-class people, in addition to refusing to increase wages and raise the price of fuel instead.

The Secretary-General of the Tunisian General Labour Union said that the increases in prices along with the the recent increases in fuel prices and the expected increase in milk prices will harm the interests of people, pointing out that the union is ready to struggle.

He also stressed that the recent increase came without the consultation with the social parties. Moreover, he is predicting the emergence of "immediate repercussions which will influence negatively on the cost of living; and which have been accumulated in a dangerous way". He also pointed out that the union will hold a meeting to take a number of steps towards the social policy of the government, which reflected negatively on citizens.

work of ready recipes for the International Monetary Fund, without taking into account the specificity of the current economic reality.

In the same vein, an economist blamed the government and the parliamentary majority for the current crisis, pointing out that the ratified budget by the parliament is based on illogical assumptions, and therefore there is no escape from drafting a supplementary budget.

Likewise, the opposition accused Yousuf Al-Shahid's government of being responsible for the economic deterioration and high prices. As a result, an MP from the "Democratic Party" ( which is a social central party) called on the necessity to confront corruption and corrupted people, who are responsible of the of finance the state budget and to face the deficit instead of collecting debts from donor countries and the International Monetary Fund.