Tunisia’s General Trade Union, (the UGTT) has threatened to mobilize all its forces against the government’s 2017 budget proposals, raising the possibility of further instability and economic disruption.
While the UGTT hostility centered upon a number of measures outlined in Friday’s proposed budget, it was measures freezing all public sector salaries while, according to the Union, smuggling and tax evasion remained unchecked, which drew the greatest fire.
Faced with overwhelming debt and an under-performing private sector, next year’s budget promises a sea change in many areas of public expenditure. Currently totaling 32.7 billion TND ($14.8 billion)–a 12% increase from 2016– the budget contains Chahed’s proposals to freeze wage increases for the public sector for next year, increase taxes and decrease subsidies. The reforms are part of an effort to limit government’s fiscal deficit, which, in 2016, constituted 6.5% of GDP.
Mitigating the government’s reduction in its spending, are the $2.78 billion in foreign loans the government intends to request next year; almost double the budgeted 2016 figure.
Spokesman for the national unity government Iyed Dahmani defended the budget proposal, claiming it aims to reduce the tax burden on poor and middle-class citizens, and that reforms are needed to reduce pressure on public financing and investments.
Dahmani emphasized that despite the country’s financial difficulties, the government will continue to provide developmental projects and assist young entrepreneurs.
Responding, the UGTT expressed their frustration over the government’s handling of the budget, saying that the final document had been introduced after the government had severed negotiations with the union
“The UGTT refuses to accept the measures undertaken in the bill,” reads an official statement from the group released on Tuesday.
They further condemned the government for refusing to raise public sector wages and failing to expose corrupt financial practices in previous government administrations.
“We call for the labor workforce to unite efforts and condemn the government for its political failure,” the statement added.
Meanwhile, issues of tax evasion (particularly the smuggling of foreign goods across Libya’s border) and corruption add to the financial burden. While informal trade is difficult to track, economic researcher Gael Raballand estimated that it accounts for around $1.8 billion TND (over $1 million dollars). Between the years 2002 and 2009, the World Bank estimates, firms tied to Ben Ali’s regime were able to subvert some $1.2 billion in tariffs.