Should Tunisia phase out energy subsidies?

Tunisia's energy subsidies have become increasingly costly, averaging 2.1 percent of GDP over the last decade and jumping to 5.3 percent in 2022. Phasing out energy subsidies would help address not only the macro-fiscal crisis but could also improve the energy sector performance and stimulate renewable energy production.

What is Tunisia's energy policy?

Tunisia mostly relies on gas imports to meet its primary energy needs: almost 97% of its electricity generation came from gas in 2016. However, energy policy puts the emphasis on renewable energy.

Should energy subsidies be phased out in 2022?

One critical reform is to phase out energy subsidies, which have become increasingly costly, averaging 2.1 percent of GDP over the past decade and jumping to 5.3 percent in 2022. This would address the macro-fiscal crisis, improve the energy sector's performance, and stimulate renewable energy production.

Will Tunisia's GDP grow in 2023?

Published under the title Reforming Energy Subsidies for a More Sustainable Tunisia, the report forecasts Tunisia's GDP growth for 2023 to be around 2.3 percent, subject to significant uncertainty and depending on the progress of financing conditions and structural reforms.

How does reform affect Tunisia's economy?

However, it is crucial to minimize the impact of reform on vulnerable households by providing stable tariffs and transfers. Tunisia's economy has been affected by a variety of challenges, including a higher trade deficit and consumer subsidies. The country's limited access to international financing has made local financing of the debt challenging.

What reforms are needed in Tunisia?

Urgent reforms are needed to improve the business environment and strengthen competition. Tunisia's GDP growth for 2023 is expected to be around 2.3 percent, subject to considerable variation depending on the progress of financing conditions and structural reforms.