Investment Expenditure: A Crucial Aspect of the Budget Execution Report
The figure that caught the attention of analysts and media in the budget execution report is the 0.4% decline in investment expenditure over a sliding year, amounting to 1,835.6 billion Tunisian dinars (MTND). While we acknowledge that this amount remains insufficient compared to the economy's real needs, it is essential to look beyond the trend and observe the capital expenditures, which represent the amounts spent on development projects directly implemented by the State and its operational arms.
As of June 2024, these capital expenditures totaled 2,990.2 MTND, compared to 2,864.3 MTND during the same period in 2023, indicating a slight 4.4% annual increase. This amount is divided between investments and direct payments (1,798.3 MTND) and capital transfers (1,191.8 MTND).
These expenditures are expected to accelerate by the end of the year. However, we must be realistic and not expect a significant leap, given the limited resources available. The State is counting every dinar in the absence of external financing for its budget and the risks weighing on its tax revenue generation machine. If local demand weakens, tax revenues will be affected. The rapid progress of these revenues in the first half of the year is attributed to the amnesty, which has borne fruit. This will no longer be the case in the coming months, and we will see what the real economic activity generates.
We emphasize that Public-Private Partnerships (PPPs) remain one of the best means to revitalize the economy. The State can contribute with non-capital inputs, and the private sector, if it finds opportunities to make profits, will invest heavily. In the short and medium term, we do not see other avenues to put the country back on the path of growth.
