Price increases aim to restore country's financial balance (Minister of Trade) | Tunisia News Gazette

Price increases aim to restore country’s financial balance (Minister of Trade)

As protests against price hikes escalate across the country and suspicious gangs come out under cover of protest to loot and destroy public property, Minister of Trade Omar EL Behi, considers, in an interview with TAP that the recent prices increases are commendable as they aim to reduce the trade and budget deficits.

He recalled that these increases, which do not affect subsidised products, “have been widely discussed in the framework of the 2018 Finance Act”.

Why did the government decide these increases instead of undertaking other reforms?

For seven years, we have been living in the same vicious circle, the country suffers from a deficit in the trade balance and a budget deficit that creates inflation, aggravates the debt and causes the depreciation of the dinar.

To stop this spiral, we plan to reduce the budget deficit to 4.9% in 2018 and 3% in 2020.

The goal is to restore the country’s financial balance and stabilise the dinar. We need to raise taxes to be able to generate more resources for the state.

The tax burden, which does not affect commodities, is shared by all.

The disadvantaged groups or the middle class are not the only ones to face these taxes; companies are also concerned by these increases, that means that even the wealthy class is concerned by these increases.

The price increases, decided in the framework of the 2018 Finance Act, consist of a 1% increase in VAT on several products, including medicines and the rise in the consumption tax on certain products and customs duties, especially for luxury products.

The government’s objectives are also to limit imports and control them, hence the reinstatement of tariffs on products from Turkey by up to 90% of the tariffs applied in the common system, as from January 1, 2018.

Let’s not forget that subsidised products are not affected by these increases. The State bears a subsidy cost of 3,520 million dinars: 1,570 MD of commodity subsidies and 1,500 MD for hydrocarbons and another 450 MD for transport.

There is also, the state’s subsidy of sugar which costs 100 MD as well as those of the water, the electricity… How a liberal state can support such a level of subsidies?

To lower prices for the consumer, we are also importing 2,300 tons of red meat that are sold at fair prices (17 dinars / kg).

As regards increases in the real estate sector, the introduction of a 13% VAT will help to further organize the sector and will have a real impact of 3% on the price of real estate.

What measures is the state taking to deal with uncontrolled price increases?

These increases are coupled with an intensification of price controls. Any case of abuse must be denounced. Citizens, the media and politicians are all concerned and are called upon to report cases of illegal increases and denounce each case of overrun, in order to limit cases of illegal price increases.

The state monitors the distribution of certain products such as sugar or vegetable oil.

Large campaigns are conducted in the regions to control the distribution of these products. We are continuously monitoring all products even those imported from the first line, for example in ports, with the aim of regulating the import.

The goal is to limit these imports, especially the deficit with some countries like Turkey which reached 1,850 MD.

We are also issuing a certificate of free sale and increasing customs taxes to streamline imports and protect the local industry.

Speculation is the result of lack of production or supply, but the state is making efforts to deal with this phenomenon and intervenes every time to fight against this scourge. It’s an everyday job for the department.

What solution has the state planned to deal with the problem of parallel trade which accounts for more than 50% of the national economy?

The State spares no effort to fight against this scourge. A new government decree on the establishment of foreign exchange bureaus was recently promulgated by the Prime Minister.

This measure will make it possible to direct exchange transactions carried out illegally to the legal circuits, as well as to support the State’s efforts in the fight against money laundering and financing of terrorism.

A draft law on foreign exchange amnesty is also proposed to the Parliament. It relates to amnesty for foreign exchange offenses committed by Tunisians living abroad.

We must create alternatives for people active in the informal sector, repression is not the solution. We must push them to enter the formal sector by restricting their activities, while offering them incentives to enter the legal system.

The State makes huge efforts to ensure the economic control of imports and also to boost exports given their importance in the fight against unemployment.

All parties concerned are called to combine their efforts to improve the export sector, which is essential for the country’s economic growth.

During the first meeting of the High Export Council, recently held under the chairmanship of Prime Minister Youssef Chahed, 20 important measures for export were announced.

They mainly concern the improvement of the general export climate and the elimination of the obstacles faced by exporters, in addition to the establishment of a general framework for the legislative and administrative reform of the export activity.

The state has therefore put in place a plan that aims to raise the value of exports to more than 50 billion dinars, by 2020.

How do you assess the current situation of the national economy?

Signs of economic recovery are recorded. Indeed, we have achieved growth of nearly 2% and an increase in exports by 4% at constant prices and 18% at current prices in 2017.

For the future, Inflation being linked to the depreciation of the dinar, we must get out of this spiral, by controlling the budget and trade deficits.

Source: TAP News Agency

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