The adjustment of the basic assumptions of the initial finance law and the promulgation of an amending finance law do not reflect a misreading of the situation by the government, but rather confirm its good management of the shocks facing the country and the new factors influencing the initial assumptions, Finance Minister Sihem Nemsia said on Tuesday. Speaking at a plenary session held Tuesday in Bardo to review the Amending Finance Law for 2023, the minister pointed out that the budget resources set out in the finance laws are estimates, while the expenditures are known and fixed in advance, which means that a supplementary finance law is needed to cover additional expenditures. She went on to say that most countries enact more than one supplementary budget law in a single year to update their assumptions. The Minister explained that one of the reasons for resorting to a Supplementary Finance Act this year was the sharp decline in agricultural yields as a result of drought and climate change, especially as 90% of agricultural production comes from irrigated farming. She pointed out that output in the agricultural sector, which accounts for 11% of GDP, fell by 8.7% in the first half of 2023 compared to the same period in 2022. She said that the growth rate forecast for 2023 had been revised downwards to 0.9% instead of the 1.8% originally projected, due to the deterioration in agricultural production. She pointed to the revision of the oil price assumption from $89 to $83 per barrel, noting that the average global oil price had reached $83 per barrel by October 13, 2023. Oil prices in 2024 are also forecast to be between $80 and $87 per barrel. The increase in domestic debt is explained by the failure to obtain the external loans originally planned, she said, stressing that the Ministry of Finance is obliged to mobilise financing for the Treasury despite the high interest rates on the domestic market, which sometimes exceed the rates applied to external debt. Nemsia stressed the government's commitment to honouring the country's domestic and foreign financial obligations in order to maintain its image as a solvent country. During the plenary session, MPs focused in particular on the need to speed up the implementation of measures to encourage domestic and foreign investment in order to boost growth. They criticised the excessive use of foreign and domestic debt to finance the budget and warned that borrowing from local banks would further dry up liquidity in the country and push up interest rates on loans to businesses. These currently stand at around 14%. They called for new approaches to financing the budget, including support for public and private investment. The MPs also highlighted the failure of measures introduced under the previous finance law to integrate the parallel sector and called for a change in the national currency to combat smuggling. Noting that the 2023 Amending Finance Law did not include measures to support the agricultural sector, despite its strategic importance, they called for an urgent action plan to support the sector and for a state of water emergency to be declared.
Source: Agence Tunis Afrique Presse
