an OECD study calls for the opening of the economy

an OECD study calls for the opening of the economy
Written by on100dayloans

The Secretary General of the Organization for Economic Co-operation and Development (OECD), Mathias Cormann presented, remotely, the results of the latest OECD economic studies devoted to Tunisia. And this during a press conference held today, April 4, at the headquarters of the Ministry of Economy and Planning in Tunis, in the presence of its minister Samir Saïed.

In front of an audience made up of journalists and officials from the ministry, the Secretary General of the OECD Mathias Cormann supported the recommendations of the study for the revival of the Tunisian economy. The recommendations are structured around seven axes.

The OECD’s recipe for achieving a sustainable recovery

– Consider extending the health pass to most activities and the exercise of certain professions. Intensify efforts to better cover rural areas, in particular through mobile vaccination centers and the activation of local actors.

  • Continue to apply fiscal support measures for the most vulnerable households and sectors of the economy until the economic recovery is well under way;
  • Ensure the maintenance of moderate inflation by consolidating the independence of the Central Bank of Tunisia and avoiding recourse to monetary financing of the budget deficit;
  • In order to adopt an inflation-targeting monetary policy, follow a roadmap that includes a transparent and credible communication strategy, the ability to produce inflation forecasts from several indicators, including regular surveys on inflation expectations, and an operational approach providing guidance on the future direction of monetary policy;
  • Define, announce and implement a medium-term fiscal plan that will reduce current spending while providing fiscal space to address potential risks and increase public investment in infrastructure;
  • Reduce the number of special regimes and VAT exemptions, better control the flat-rate regime, support the application of tax rules and draft a complete general tax code;
  • Limit recruitment and internal promotions in the public sector; facilitate voluntary departures; and make salary adjustments conditional on compliance with performance criteria.
  • Accelerate debt restructuring processes through out-of-court insolvency mechanisms and the creation of special chambers in courts dealing with business cases.

    For an opening of the economy and the strengthening of competition

    • Introduce the obligation to conduct an ex ante (and if possible ex post) economic assessment of the impact of any new regulation;

  • Reduce tariffs and non-tariff barriers for onshore businesses, starting with capital goods and intermediate inputs;
  • Improving the infrastructure investment framework and accelerating the digitalization of customs procedures, including through the introduction of automatic import and export licenses for all products, with transparent post-clearance controls based on Risk Assessment.

    The need to reform public enterprises

    • Create a public equity agency, with sufficient resources, to assess financial performance and restructuring options, including privatization, and strengthen performance targets.

  • Preserve the independence of INLUCC and provide it with the necessary resources.

    Making the green transition a reality

  • Promote ecological transition and renewable energies by encouraging investments and public-private partnerships; adjusting the regulatory framework and carbon taxation; reducing energy subsidies; and increasing direct transfers to needy households.

Foster the creation of more and better jobs

• Reduce prior authorization for market entry and investment while maintaining transparent ex-post controls to ensure compliance. Apply a tacit consent rule and set up one-stop shops whenever possible.

  • Carry out a comprehensive review of existing subsidies and tax incentives and an assessment of their impact, and simplify the tax system

    Improving skills and labor market policies

    • Increase the efficiency of education spending in other parts of the education system to finance the expansion of access to preschool education, prioritizing low-income households and single-parent families.

  • Improve the selection as well as the initial and in-service training of teachers in vocational education and training, with particular attention to pedagogical skills.
  • Centralize the governance of labor market activation programs, including public works and entrepreneurship grants; increase the efficiency of spending by better targeting those who need it most; and improving program impact evaluations.

• Encourage more competition from private employment service providers and consider outsourcing certain tasks to private providers using performance-based incentive contracts.

Slow is the recovery according to the OECD

As a reminder, the study speaks of a slow economic recovery, especially since “Restrictions on mobility are hampering the recovery of tourism and weighing on highly labour-intensive services. The high level of unemployment is holding back private consumption, political uncertainties are weighing on the implementation of reforms and investment, and the weakening of external demand is holding back the recovery of manufacturing activity”.

“Inflationary pressures have resumed in 2021 and could increase due to the surge in commodity prices caused by the war in Ukraine,” the study reads.

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Hamza Marzouk

With a literary background, Hamza Marzouk has been working at the Maghreb Economist since 2011. He has closely followed social movements, in all their forms, since 2011. Socio-economic rights are his favorite field. Likewise, he is interested in the world of culture and art more particularly: cultural entrepreneurship and Tunisian cinema.

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