Tunisia's stability may be illusory.

Tunisia maintains the admiration and goodwill of international financial agencies owing to its favorable macroeconomic record over the past several years.

Typical of comments supporting Tunisia's reputation is the following from a 2007 report from the African Development Bank (ADB). "Tunisia has a stable political environment, with one President since 1987, who is backed by the Rassemblement constitutionnel democratique (RCD). He won a 4th term in 2004 with 89% of the votes cast and enjoys a huge majority in parliament (80% of the 189 seats)."

Immediate suspicion ought to be cast on this type of comment from the huge majorities from both the electoral process and the legislative census. International observers of elections often take such huge majorities as a telltale sign of election fraud.

Stability, however, in the Middle East is an even rarer commodity than untainted elections, so the international financial community does not complain about the heavy handed participation by the government in the country's economy.

The problem is that even though Tunisia can claim macroeconomic progress-the International Monetary Fund (IMF) estimates that Tunisian GDP will grow 6.0 percent in both 2007 and 2008-the county's consumers are not well served by government induced economic inefficiencies.

Economic control by the government, and associated limits on freedom of expression, render an economy vulnerable to economic shocks. Tight control can be managed for only so long.

Tunisia's reform agenda, as reported by the IMF on November 14, 2006, includes suggestions to open the economy further, stimulate private investment, and overhaul the educational system. The IMF also urged Tunisia to stimulate creation of jobs. Many recent graduates are encouraged to emigrate to Europe, particularly France, by high unemployment.

One major reform that impacts consumers directly is the elimination of Tunisia's 29 percent Value Added Tax (VAT). Strong demand followed this move, which increased inflationary pressure.


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