Tunisia

  • Article // Feb 25, 2014
    Zubair Iqbal
    The Arab Countries in Transition (Egypt, Jordan, Libya, Morocco, Tunisia, and Yemen, or ACTs) are at a crossroads. The political upheaval has provided them with a unique opportunity to reset their economic policies to achieve sustained growth with income equality. Failure to make appropriate policy choices could deepen the political and economic crises. Different approaches taken by ACTs to the emerging economic challenges, especially by Egypt and Tunisia, provide a useful template for designing a realistic and manageable response. As shown by the experience of transition economies in East Asia and Eastern Europe, successful economic reforms require broad political consensus on a reform strategy that is supported by a strong constituency of stakeholders. Without such consensus, it is difficult to effectively address the seemingly conflicting objectives of macroeconomic stabilization, which calls for a reduction in fiscal deficit, with political demands for higher subsidies, employment opportunities, and accelerated growth, which would likely increase fiscal and external deficits. So far, many ACTs have had mixed success in their policy choices.

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