Tunisia's economic landscape has been exhibiting signs of state-led intervention, echoing mechanisms seen in centrally planned economies. The country's shift from a welfare state to an interventionist state has raised concerns about its ability to correct its economic trajectory. Since 2021, the Tunisian government has increased its direct involvement in the economy, controlling prices, and reorganizing key sectors. This has led to shortages, rigidities, and a decline in investment.
The government's control of prices has had unintended consequences, with price ceilings becoming de facto price floors. This has led to products disappearing from the market, being sold on the black market, or experiencing decreased quality and production. The agricultural sector has also been affected, with farmers reducing production or changing crops due to artificially set prices that do not cover their costs. This highlights the challenges of implementing price controls and the need for a more nuanced approach.
The labor market has also been impacted by government intervention, with the introduction of new regulations making it more difficult for businesses to hire workers on temporary contracts. While the aim is to protect workers, this could lead to a decrease in hiring and an increase in informal employment. The energy sector has also faced challenges, with a significant increase in electricity demand and a decline in investment in the state-owned electricity company, STEG.
The concentration of power in the executive branch has raised concerns about the ability to correct policy mistakes. With weakened counter-powers, it has become more challenging to address errors in public policy. The fight against corruption has also been hindered by institutional weaknesses, making it difficult to hold those in power accountable. The lack of transparency and accountability has contributed to the persistence of corruption.
Investment has been a major casualty of the current economic trajectory, with a decline in investment in key sectors. The government's focus on managing the consequences of its economic policies rather than addressing the root causes has led to a lack of investment in critical areas. This has resulted in a shortage of essential goods and services, including electricity, and has hindered the country's ability to achieve sustainable growth.
The decline in investment has been particularly pronounced in the energy sector, with a significant decrease in investment in STEG between 2021 and 2025. The government's inability to anticipate and address the country's energy needs has led to a crisis, with electricity demand outstripping supply. The lack of a clear energy strategy has exacerbated the problem, with the ministry of energy lacking a permanent head.
To address these challenges, Tunisia needs to adopt a more nuanced approach to economic policy, one that prioritizes investment, transparency, and accountability. The government must work to create an environment conducive to private sector growth, while also addressing the country's institutional weaknesses. This will require a fundamental shift in the way the government approaches economic policy, one that prioritizes the needs of the economy and the people over political considerations.
Key points
- The Tunisian government's increased intervention in the economy has led to concerns about the country's economic trajectory.
- The concentration of power in the executive branch has raised concerns about the ability to correct policy mistakes.
- Investment has been a major casualty of the current economic trajectory, with a decline in investment in key sectors.
