Tunisian PM urges continued focus on economy after election

Credit: REUTERS/Zoubeir Souissi

By Tarek Amara and Angus McDowall

TUNIS, Aug 29 (Reuters) - Tunisian Prime Minister Youssef Chahed, a candidate for president in next month's election, said on Thursday the country should press ahead with his government's focus on the economy and security if it is to "join the club of strong democracy".

Chahed told Reuters that the "difficult" reforms could cost him politically, but he said they had stopped the economy from collapsing and that things were improving.

Spending cuts and tax and fuel price increases have caused frustration among many Tunisians, prompting strikes and protests, and raising concern over disaffection in a country that embraced democracy only after a 2011 revolution.

"We have to focus on the economy in order to give Tunisians prosperity and welfare, in order to give jobs for young Tunisians and in order to prepare for a new sustainable model of development in Tunisia," Chahed said in English.

While Tunisia emerged as the only relative success story of the "Arab spring" revolts that it triggered that year, analysts have said economic troubles and a string of jihadist attacks could blow its transition to democracy off course.

Nationally, unemployment has risen from 12% before the revolution to 15.2%, but in some cities it stands at about 30%, with poverty aggravated by poor public services.

Tunisia's post-revolutionary constitution splits power between the president and prime minister, giving the head of state control only over foreign and defence policy.

However, Chahed said that if elected in the Sept. 15 vote, he would use his position as president to focus on security issues, bringing foreign investment and securing stronger European Union support due to Tunisia's place on the front line of the Mediterranean migration crisis.

"The economy is no longer threatened by high deficits, but of course now we should look to the future, we should boost the economy through boosting foreign direct investment, tourism activity, agricultural activity," he said.

"We have to work on a new deal with our friends in the EU... Tunisia is protecting the south border of Europe and we can no longer do that in this condition," he said, urging more European investment and political engagement.

He said the economy had been on the verge of collapse when his government took over in 2016, a year after jihadist attacks devastated the country's crucial tourism sector. While cutting the deficit, the government diverted more money towards security.

Tunisia had only 5.6 million tourist visits in 2016, but 9 million are expected this year and "we can target" 10 million next year, he said.

The fiscal deficit will be 3% of gross domestic product (GDP) next year, compared to about 3.9% now and 7.4% three years ago, while inflation would drop to about 5% by the end of next year from the high of 7.8% last year, he said.

"All the difficult measures we have taken are for the benefit of the country, such as reducing energy subsidies, raising contributions to social funds and imposing some taxes," he said.

"We did so despite the enormous political cost that we know, but the country's interest required that," he added in Arabic.

(Reporting by Tarek Amara and Angus McDowall Editing by Frances Kerry)

((angus.mcdowall@thomsonreuters.com; Reuters Messaging: angus.mcdowall.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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