Tunisia has come a long way since the democratic uprisings in 2011. The country has completed the transition to democracy, in contrast to other nations that took the brunt of Arab Spring and are still struggling with the fallouts.
Tunisia has adopted a new constitution and has conducted successful parliamentary and presidential elections in the following years.
Subsequently, everything was fine in the African country until the militant attacks in 2015. The assaults which took lives of several foreign tourists cost Tunisia dearly.
Tourism has been a vital source of revenue for the country. In 2014, the total contribution of the travel and tourism sector represented 15.2 per cent of GDP and supported 473,000 jobs, representing 13.9 per cent of total employment.
Last year, tourist arrivals fell to 5.5 million, bringing down the sector’s contribution to 7.4 per cent of GDP and accounting for 6.8 per cent of total employment.
Following the militant raids in Bardo Museum in central Tunisia and at a beach resort in Sousse, whose victims were mostly people from Britain and Ireland, many countries, including the UK and France, heightened travel alerts for their nationals planning trips to the once-popular beach destination. This followed the suspension of holiday trips by several European tour companies and cruise operators.
Nonetheless, international lenders came to Tunisia’s rescue. In May, the International Monetary Fund (IMF) approved a four-year loan programme worth roughly $2.8 billion to support the country’s economic and financial reforms.
The World Bank also approved a five-year plan in the same month to lend up to $5bn to help the country in reviving economic growth and creating jobs.
The country’s parliament had announced an array of financial and central bank-related reforms in the past few months.
Rating agency Moody’s says the implementation of the long-delayed structural reform agenda in the banking, fiscal and business environment areas will lift the country’s future growth potential with the assistance of international institutions.
“Tunisia benefits from strong institutions relative to rating peers and the support of international institutions, which aid the country’s transition to a more sustainable growth model. However, its economic potential is linked to further reform progress,” says Elisa Parisi-Capone, a VP-Senior Analyst at Moody’s.
However, Moody’s warns that social and security-related challenges weigh on tourism revenues and on investment activity.