Risk Rating Political: 5.0 Commercial: 5.0 Overall: 5.0
Strengths: Strong leadership; diversified economy; economic restructuring mostly in place.
Weaknesses: Heavy handed political approach; residual fundamentalist influence.
Danger Signals: Deterioration in the health of President Ben Ali.
Flexible Exchange Rate: Yes
Privatization Program: Yes
Foreign Portfolio Investment: Yes
Oil Export Dependency (0-10 ascending): 3
Internal Extra-Legal Threat (0-10 ascending): 2
External Threat (0-10 ascending): 4
Per Capita GDP ($US): 1,900
1996 GDP Growth (%): 7
1996 Inflation (%): 5
1996 Current Account ($US billion): -0.5
Quarterly Developments:
Tunisia's political risk profile in the second quarter of
1997 was dominated by the decision by President Zine el
Abidine Ben Ali to re-shuffle the leadership of the ruling
Rassemblement Constitutional Democratique (RCD), apparently in
an effort to better prepare it for the challenges of
implementing the economically oriented association agreement
with the European Union. Within the framework of the re-
shuffle, Foreign Affairs Minister Adderrahim Zourai and
Interior Minister Mohammed Ben Rejeb join President Ben Ali,
Prime Minister Hamed Karoui, Abdelaziz Ben Dhia (the former
defense minister) and Justice Minister Abdullah Qilal as full
members of the RCD Politburo. Leaving the Politburo to make
way for them were Sadok Chaabane, the former justice minister,
and Finance Minister Mohammed Jeri.
On the domestic political front, many in the Tunisian
opposition were disappointed by the fact that the earlier
release from detention of Mohammed Mouada, the former leader
of the Mouvement des democrates socialistes, the country's
leading secular opposition party, was not followed by further
evidence of political liberalization. According to reports
from Tunis both Mouda and a number of his associates (also
recently released from detention), remained under very close
police surveillance, and are effectively barred from taking
part in normal political activities.
For many foreign governments the Tunisian human rights
situation remains a cause of some concern, though most appear
content to raise the matter in politely elliptical fashion
before dropping it in favor of other, pleasanter subjects. A
recent visit to Spain by Prime Minister Karoui fit neatly into
this mode of diplomatic politeness, with no hard demands being
made by the Spanish side. So too, for that matter, did high
level communications between Tunisia on the one hand, and
France and the UK on the other, both of which took place in
the second quarter of 1997.
Economically, the period of the second quarter of 1997
continued to bring good news for Tunisia, with a revised
forecast anticipating a 5.7% GDP growth rate for the country,
down slightly on the 7% achieved in 1996, but still relatively
impressive. Particularly noteworthy was the fact that overall
investment in 1997 was expected to rise by 12%, this to $4.9
billion. This figure is equivalent to 25% of GDP.
Reflecting the solid economic picture, Tunisia was
accorded an investment grade rating by Standard & Poor's of
the US (BBB-) for long-term foreign-exchange denominated debt. It was also
awarded a short term foreign currency credit rating of A3 by
the same agency.
On the privatization front Tunisia continued to make good
strides during the second quarter of 1997, with the Ministry
of Industry announcing plans to invite bids for 53.76% of
Societe Tunisienne des Engrais Chimiques, the country's second
largest fertilizer company. Other near term privatization
targets include both major food processing and transportation
firms.
Link to Middle East Risk Report quarterly update.