The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world.  They analyze a variety of economies that are or could be markets for U.S. businesses.  The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption.  The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.

Executive Summary

In 2021, Tunisia’s economy continued to be heavily impacted by the COVID-19 pandemic. Despite a loosening of containment measures from those in place in 2020, Tunisia’s GDP grew by 3.1 percent in 2021 after a record contraction of 8.8 percent in 2020. The country still faces high unemployment, high inflation, and rising levels of public debt, in addition to a shortage of staple food products and low tourism revenues due to Russia’s further invasion of Ukraine.

On July 25, citing widespread protests and political paralysis, President Saied took “exceptional measures” under Article 80 of the constitution to dismiss Prime Minister Hichem Mechichi, freeze parliament’s activities for 30 days, and lift the immunity of members of parliament. On August 23, Saied announced an indefinite extension of the “exceptional measures” period and on September 22, he issued a decree granting the president certain executive, legislative, and judiciary powers and authority to rule by decree, but allowed continued implementation of the preamble and chapters one and two, which guarantee rights and freedoms. Civil society organizations and multiple political parties raised concern that through these decrees President Saied granted himself unprecedented decision-making powers, without checks and balances and for an unlimited period. On September 29, Saied named Najla Bouden Romdhane as prime minister, and on October 11, she formed a government. On December 13, Saied announced a timeline for constitutional reforms including public consultations and the establishment of a committee to revise the constitution and electoral laws, leading to a national referendum in July 2022. Parliamentary elections would follow in December 2022. On March 30, 2022, the President issued a decree formally dissolving Parliament.

Before the pandemic and President Saied’s decisions on July 25, successive governments had advanced some much-needed structural reforms to improve Tunisia’s business climate, including an improved bankruptcy law, investment code, an initial “negative list,” a law enabling public-private partnerships, and a supplemental law designed to improve the investment climate. The Government of Tunisia (GOT) encouraged entrepreneurship through the passage of the Start-Up Act in June 2018. The GOT passed a new budget law in January 2019 that ensures greater budgetary transparency and makes the public aware of government investment projects over a three-year period. These reforms are intended to help Tunisia attract both foreign and domestic investment.

Nevertheless, substantial bureaucratic barriers to investment remain and additional economic reforms have yet to be achieved. State-owned enterprises play a large role in Tunisia’s economy, and some sectors are not open to foreign investment. The informal sector, estimated at 40 to 60 percent of the overall economy, remains problematic, as legitimate businesses are forced to compete with smuggled goods. Due to a growing budget deficit, the GOT sought international lending support in 2021. In February 2022, high-level discussions on economic reforms and government spending cuts were held between the GOT and the IMF, in the hopes of reaching an agreement on an IMF lending package. Such a program would likely include structural reforms.

Tunisia’s strengths include its proximity to Europe, sub-Saharan Africa, and the Middle East; preferential or free-trade agreements with the EU and much of Africa; an educated workforce; and a strong interest in attracting foreign direct investment (FDI). Sectors such as agribusiness, aerospace, infrastructure, renewable energy (notably green hydrogen), telecommunication technologies, and services remain promising. The decline in the value of the dinar over recent years has strengthened investment and export activity in the electronic component manufacturing and textile sectors.

Since 2011, the United States has provided more than $500 million in economic growth-related assistance, in addition to loan guarantees in 2012, 2014, and 2016 that enabled the GOT to borrow nearly $1.5 billion at low interest.

To access the ICS, visit the U.S. Department of State Investment Climate Statements website.