Tunisia: Goodbye to State Socialism. Reforms Promise to Make It One of the Most Liberal Economies in the Arab World

Article excerpt

A visitor to Tunisia familiar with its past reputation as the "sick man" of North Africa might be pardoned these days for doing a double-take.

The 17 months since the fall of the country's autocratic founding patriarch, Habib Bourguiba, have witnessed a veritable "Tunisian spring" of political liberalization.

More striking has been a reorientation away from three decades of state socialism that has retrieved Tunisia's economy from near collapse three years ago and helped produce the highest economic growth rate in North Africa.

Economists partly credit the turnabout to the International Monetary Fund which, in return for a $259 million loan three years ago, forced Tunisia to reduce its deficits and public spending.

Diplomacy has also played a part. Following the restoration of relations with Tripoli early last year, Libyan tourists surged across the Tunisian border, spending $600 million on consumer goods unavailable at home.

The centerpiece of the recovery program has been a package of economic reforms that promise to make Tunisia one of the most liberal economies in the Arab world.

This combination of factors has produced impressive results: exports, remittances, and foreign currency reserves all increased in 1987 and 1988, while tourism soared. Last year Tunisia recorded its first balance of payments surplus since gaining independence in 1956.

Improving economic conditions have fueled aspirations that Tunisia might some day replace Lebanon as a key financial link between the Arab world and Europe.

"Our ambition is to make out of Tunisia a financial and trade center" says the head of the country's central bank, Ismael Khalil.

Mr. Khalil says all the elements are in place to make such hopes a reality: stability, favorable investment laws, an entrepreneurial private sector, and an economic foot in the doors of Europe, the Maghreb, the Arab world, and even sub-Saharan Africa.

Hopes of becoming the next Beirut in a financial sense have been nourished by the recent decision of New York's Citibank to open a branch in Tunis, a move Tunisians point to as a sing of investor confidence. …