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Public Debt, Growth, And Stabilization In Tunisia: A New Narrative for a Structural Reform Agenda

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  • Baghdadi, Leila
  • Labidi, Moez

Abstract

This paper assesses debt sustainability in Tunisia using the Debt Sustainability Analysis (DSA). We construct three hypothetical scenarios (A, B and C) over the period 2023-2027. The first two scenarios are called Business as usual approaches. In Scenario A, we assume that Tunisia will continue the same path as in the past three years, without an IMF agreement. In scenario B, Tunisia reaches an agreement with the IMF. However, the lack of considerable progress on the reform agenda causes the ending of the IMF agreement. The last one (Scenario C) is a proactive reform scenario. We conclude that "business as usual" approach (scenario A and B) cannot guarantee neither economic resilience nor debt sustainability. There is an urgent need for a broader approach to debt sustainability with reforms, similar to Scenario C, that would lead to resilience toward both economic and non-economic shocks.

Suggested Citation

  • Baghdadi, Leila & Labidi, Moez, 2023. "Public Debt, Growth, And Stabilization In Tunisia: A New Narrative for a Structural Reform Agenda," FDL Policy Notes 2310, CEPREMAP.
    • Handle: RePEc:cpm:notfdl:2310
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    References listed on IDEAS

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    1. Sergei Guriev, 2018. "Economic Drivers of Populism," AEA Papers and Proceedings, American Economic Association, vol. 108, pages 200-203, May.
    2. Alberto Alesina & Gabriele Ciminelli & Davide Furceri & Giorgio Saponaro, 2024. "Austerity and elections," Economica, London School of Economics and Political Science, vol. 91(363), pages 1075-1099, July.
    3. Essers, Dennis & Cassimon, Danny & Prowse, Martin, 2021. "Debt-for-climate swaps in the COVID-19 era: killing two birds with one stone?," IOB Analyses & Policy Briefs 43, Universiteit Antwerpen, Institute of Development Policy (IOB).
    4. Mahmoud Sami Nabi, 2019. "Making the Tunisian Resurgence," Springer Books, Springer, number 978-981-13-3771-0, January.
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