A Quick Guide to the ‎ Supplementary Budget Bill 2015 ‎

Jasmine foundation – Yesterday, 4 August, saw Prime Minister Habib Essid present the Supplementary Budget bill for 2015 to the Assembly of People’s Representatives for adoption. The head of government emphasized that the bill aims to address the “exceptional conditions” Tunisia is going through. The measures are primarily intended to guarantee the stability of public finances, strengthen economic productivity and ease the difficulties facing some sectors and companies.

The bill also contains measures aimed at boosting job creation in interior regions and measures to help lower middle and working class families through facilitating access to more affordable housing.

The table below shows the changes in the fiscal forecast:

  Original Prediction 2015 Revised Prediction
Economic growth 3% 1%
State Budget 29 billion dinars 27.9 billion dinars
Fiscal deficit ratio 4.9% 4.8%
Public debt 52,9% of GDP 51,9% of GDP  (1.906 billion dinars)

The key components of the bill are the following:

Reduce the Budget Deficit

  • Reduce the overall State Budget for 2015 of 29 billion dinars to 27.9 billion dinars, reduce the fiscal deficit ratio of 4.8% (as compared with 4.9% predicted for 2015) and reduce public debt to 1.906 billion dinars (to 51,9% of GDP from the 52,9% predicted for 2015)

Structural Reforms

  • Reform the fiscal and public financial system – restructure state banks, develop a legal and institutional framework for partnership between public and private sectors, reform the social security system and simplify administrative procedures to promote investment and facilitate economic transactions

Security

  • Mobilize 306 million dinars to provide equipment needed for security and military forces and customs services, including hiring 2500 extra officers in security forces
  • Dedicate a budget of 4.2 million dinars for a comprehensive strategy to combat extremism by supporting youth and family services, and education, culture and health sectors, especially in marginalized regions, including expanding youth and children’s activities and festivals and hiring more medical workers and specialists in interior regions
  • Strengthen cooperation with several allies and friendly countries and regional organizations in the fight against terrorism

Support to Key Economic Sectors

  • Strengthen the tourism and handicrafts sectors to maintain jobs through financial and commercial restructuring of companies and renewal of investments
  • Support small and medium sized businesses through support to financial restructuring and the extension of loan guarantee mechanisms in medium and long term loans and contributions to economic sectors not currently covered by these mechanisms
  • Provide an exceptional additional coverage of 75% to 90% by the Tunisian Guarantee Company (SOTUGAR) for the process of creating or expanding companies

Regional Development

  • Develop a program to accelerate project and business creation in 14 interior governorates – including by doubling the capital of the SME financing bank (la banque de financement des petites et moyennes entreprises, BFPME), increase public financing for investment companies devoted to regional development and provision of incentives to companies to encourage the recruitment of graduates seeking employment

Social Spending

  • Renovate poor neighborhoods, facilitate the acquisition or rental of houses and strengthen programs for social housing
  • Equip schools, especially in remote areas, with a dedicated 40 million dinar budget, and build the partnership with private and civil society in this area

The Assembly is in the midst of discussing the bill, and a number of amendments have been proposed by the Finance Committee including:

  • Lifting of all taxes on employed persons with a total annual salary of 0 to 5000 dinars
  • Cancellation of debts of small farmers totaling between 2000 and 3000 dinars
  • Amendment to article 26 to raise the lower threshold for loans from 150,000 dinars to 200,000 dinars
  • Deletion of article 15 that would establish a joint committee between the Ministry of Finance, Ministry of Tourism and the Tunisian Central Bank to examine requests by hotel owners to cancel part of their debt
  • Deleting the government’s proposed cancellation of the “exit visa” for foreigners

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