Index trend
Previous quarterly editions
Expropriation Risk: 63 63 54 54 ►Political Violence Risk:57 57 57 57 ►Terrorism Risk:53 53 53 53 ►Exchange Transfer and Trade Sanction Risk: 54 55 54 54 ►Sovereign Default Risk:83 83 83 83 ►
Overall Risk Temperature: 62 (Significant) TREND ►
Special topic: Gray zone aggression
Degree to which the country relies on outbound gray zone action to achieve its strategic objectives1 = Not at all5 = Gray zone action is a core tactic
1
Impact of inbound gray zone attacks on the country1 = Negligible impact5 = Significant impact on economic growth and/or political stability
2
Tunisia has two neighbors: Algeria and Libya. Relations are friendly with Algeria, and Algiers has a policy of non-interference in other countries, so there have been no instances of gray zone aggression from there. Libya is embroiled in its own fractious domestic politics, so any foreign policy emerging from that country primarily revolves around domestic issues.
Some gray zone aggression happened during the election of President Kais Saied in 2019 and his coup two years later. Saudi and Emirati influencers conducted operations on social media in support of the eviction from power of the political Islamist party Ennahda, which they saw as being in league with the Muslim Brotherhood, a group that they fear could destabilize their own countries. The extent and impact of Saudi and Emirati influence in Tunisia, however, is likely to have been small.
Nonetheless, Saied regularly speaks in conspiratorial terms about plots between internal and external enemies. He spreads misinformation liberally, and his supporters subject his critics to harassment and doxing (sharing private and identifying details of a person online).
Intimidation and jailing of opponents got underway months before the presidential elections scheduled for October. On one day alone, 6 August, four potential presidential election candidates were sentenced to eight months in prison and banned from running for office. Most intimidation and gray zone type incidents would be aimed at internal opposition, but it would not be a massive leap to target foreign companies that the president might consider to be part of “foreign plots.”
TREND ►
An International Center for Settlement of Investment Disputes tribunal ruled in Tunisia's favor in December 2023 in a long-running expropriation claim brought by the Dutch ABCI Investments. The latter had sought damages worth $12 billion in a dispute over its failed attempt to buy a stake in the Banque Franco-Tunisienne in 1982. As such, Tunisia is no longer subject to outstanding expropriation claims from international companies.
Nonetheless, the unpredictable and autocratic style of the president is a concern for businesses, especially given that judicial independence is eroding. Several businessmen have been arrested over the past 18 months, notably the tycoon Marouane Mabrouk, who was detained in November 2023 over allegations of embezzlement during the rule of former President Zine El Abidine Ben Ali. Saied has stepped up calls in recent months for prosecutors to take tougher action against business leaders over historical corruption claims, seemingly in an attempt to pressure them to accept settlement deals that would provide the state with a much-needed injection of funds.
Demonstrations by opposition political parties against the government had been losing momentum, but the presidential polls on 6 October reinvigorated them.
Detentions of the president’s potential rivals rose steadily in the run-up to the election. Numerous political opponents and critics of the president were detained or sentenced on spurious sedition charges. Rached Ghannouchi, leader of the opposition Ennahda Party, was sentenced in February to three years in prison and the party fined $1.1 million over alleged illicit foreign funding. Ghannouchi had been speaker of Parliament, and Ennahda had been the largest party prior to Saied’s unilateral dissolution of the legislature and assumption of sweeping “emergency” powers in a July 2021 “self-coup.” Saied’s closest opponent in the presidential race, Ayachi Zammel, was sentenced to 12 years in jail a few days before the election.
Saied won the election with more than 91% of the vote on a 29% turnout, amid calls by opposition parties to boycott the polls. Zammel won 7%.
Terrorist attacks are an ongoing threat, although extremist organizations’ communications and organizational networks have been effectively disrupted since two mass shootings in 2015. On January 31, the government extended a state of emergency that has been in place since then.
Most recent incidents tend to have been “lone-wolf” attacks, including three last year: In May 2023, a member of the National Guard shot dead three security officers and two worshippers at a Jewish pilgrimage site, while separate knife attacks in June and July left one police officer dead and another wounded.
Foreign currency reserves rose from 105 days’ worth of imports in February to 117 days of imports in September but remain close to the critical level of three months.
Saied’s administration has introduced legislation that effectively forces the central bank to lend the government money to finance its deficit and help it repay foreign debt. The legislation, approved by the Cabinet in late January and ratified by Parliament within days, was passed against the advice of the governor of the central bank.
The government in March had announced measures to streamline regulations on foreign exchange processes and ease foreign financial transactions. The initiative was part of a wider set of promised reforms to improve the business climate, which in turn is linked to ongoing talks with the International Monetary Fund (IMF) over a financial support package.
External debt has risen significantly over several years and currently stands at around 90%. The government continues to run large budget deficits; the deficit in this year’s budget is forecast to be 6.6% of GDP, which is likely to be covered through further domestic borrowing.
Outstanding public debt (domestic and external debts of the Tunisian state) increased by 6.5% to TND 127.4 billion ($42 billion) in the first half of 2024, according to the Tunisian National Institute of Statistics. This is the slowest increase since the COVID-19 crisis. External debt comprised less than half (48.9%) of all debt for the first time since 2010. However, domestic debt rose by 24.9% in the first half of 2024 compared with 20.5% during the same period in 2023.
In January, the government confirmed that it had successfully paid all of its domestic and foreign debt obligations last year. Around $4 billion in foreign debt comes due this year, and the state budget for the year indicates that debt servicing costs are projected to hit 14.1% of GDP in 2024, compared with 13.1% last year and 10.0% in 2022. Meeting with IMF Director General Kristalina Georgieva in Davos earlier this year, then Prime Minister Ahmed Hachani expressed confidence that all debt would be repaid on schedule in 2024.
In March, the European Union provided the Tunisian Treasury with EUR 150 million as part of a EUR 900 million economic stabilization program. However, the government will require a larger injection of foreign funds, as well as undertaking painful fiscal reforms. On August 28, the Tunisian central bank signed an agreement with Italian bank Cassa Depositi e Prestiti (CDP) to receive a EUR 50 million credit facility. Negotiations with the IMF over a $1.9 billion support package have stalled since a staff-level agreement was reached in 2022.
