CJD TALKS 2024: Expert Economist Analyzes Tunisia's 2025 Budget Law
In the third podcast of the CJD TALKS 2024 series, Chekib Ben Mustapha, an economic expert, delves into the implications of Tunisia's 2025 budget law. While the law introduces social measures, it raises questions about its ability to truly relaunch investment.
The discussion begins with a crucial observation: there are two budget laws for 2025. The first is the government's proposed law, and the second is an amended version recently adopted. The differences between the two are significant.
Ben Mustapha notes that the initial proposal contained nothing surprising. With a decreasing margin of maneuver, economic constraints dictate a priority on budget balances over tax incentives for businesses. This reflects a persistent trend where investment has not been a priority in the budget law for several years.
The government traditionally has two solutions: reduce expenses (salaries, subsidies, etc.) or increase tax revenue. The novelty of the 2025 budget law lies in a social measure aimed at supporting purchasing power. Thus, annual revenues up to 50,000 TND will benefit from a tax reduction, equivalent to an increase of 30 to 50 TND per month.
However, this measure comes at a cost, which the state compensates for by increasing the Personal Income Tax (IRPP) for salaries exceeding 50,000 TND annually, from 35% to 40%. Similarly, large enterprises, particularly those with a turnover exceeding 20 billion TND, will see their corporate tax increase from 20% to 25%.
A major criticism of the new budget law is the growing tax pressure on SMEs and businesses. Although Tunisia has one of the highest tax rates in African countries, the counterpart in terms of infrastructure, education, and health remains insufficient.
Ben Mustapha also recalls that investment has long been a "adjustment variable" used to compensate for budget imbalances. However, the absence of a complementary budget law in 2025 marks a change, avoiding further reductions in investment budgets.
The relaunch of public investments is a central axis of the current government. A special commission has been set up within the Prime Minister's office to monitor the progress of delayed major public projects. These initiatives, regularly held under the auspices of the Interministerial Council, aim to accelerate structural projects and strengthen their role as a driving force for economic development.
However, priorities remain unclear. While the Ministry of Economy identifies four priority sectors, the Ministry of Industry lists eighteen. The lack of coordination between these entities has led to a failure in signing sectoral agreements, despite quality preparatory work.
A striking example of this inefficiency is the Tunis-Carthage airport. Ben Mustapha advocates for a more systematic recourse to public-private partnerships (PPPs) to reduce delays and costs. Comparing Tunisia to Greece, he notes that the latter, despite its bankruptcy 15 years ago, has managed to bounce back thanks to structural reforms and the privatization of certain assets.
Beyond fiscal issues, the expert highlights persistent blockages. The inefficiency of public services and the lack of optimized management hinder private initiatives. He calls for better governance, digitalization of administrative processes, and an annual horizontal law that addresses obstacles to the business climate.
Finally, Ben Mustapha stresses the need for a long-term vision for economic recovery. As Tunisia has not experienced significant growth in 15 years, it is urgent to prioritize national investment and support private sectors affected by successive crises, such as the COVID-19 pandemic or the war in Ukraine.
The 2025 budget law, although ambitious in some aspects, must be accompanied by structural reforms to truly encourage investment and ensure sustainable growth.
