Tunisia’s economy is expected to be adversely affected by COVID-19 pandemic in 2020. The real gross domestic product (GDP) of Tunisia is expected to shrink, unemployment level to increase and current account balance to remain negative this year. As of 21^st July 2020, Tunisia had 1,348 confirmed COVID-19 cases out of which 1,095 people have recovered from the disease while 50 have lost their lives.

In this blog post we will be focusing on economic impact of COVID-19 pandemic and fiscal, monetary and social policy response of Tunisia government under following sections –

1. Impact of COVID-19 on Tunisia Economy in 2020

2. COVID-19 Containment Measures of Tunisia

3. COVID-19 Related Fiscal Policy Measures by Tunisia

4. COVID-19 Related Monetary Policy Measures by Tunisia

5. COVID-19 Related Social Policy Measures by Tunisia

 

 

1. Impact of COVID-19 on Tunisia Economy in 2020

Tunisia’s real gross domestic product (GDP) was TND 73.699 billion in 2019 and due to COVID-19 outbreak it is estimated to decrease by 4.276% to be around TND 70.548 billion in 2020.

Tunisia’s unemployment rate was 16.022% of total labor force in 2019. Due to slowdown in global economic activity due to COVID-19 pandemic the unemployment is expected to increase by 13.05% and reach 18.427% in 2020.

Tunisia’s current account balance has remained constantly negative since 2017. In 2020, its current account balance is expected to be at -7.496% of GDP compared to -8.796% of GDP in 2019. This means Tunisia will remain net borrower from rest of the world in 2020.

As of 08^th July 2020, the Tunisia government has taken following fiscal, monetary and social policy measures to contain coronavirus (COVID-19) pandemic.

2. Coronavirus (COVID-19) Containment Measures of Tunisia

Quarantine/Confinement

• On 17^th March 2020, a night curfew (from 18 hour in the evening until 6 hour in the morning) is announced starting on March 18.
• On 21^st March 2020, A 2-week nationwide lockdown is announced.
• On 31^st March 2020, Extension of the lockdown has been announced until April 20.
• On 17^th April 2020, Tunisia government adopted a decree-law to fix fines in case of violation of the curfew or confinement. This fine is TND 50 (around 16 EUR) but could increase to TND 100 in the event of recurrence and should be paid within a period not exceeding ten days. The same legislative decree will also make it possible to take additional measures concerning the movement of people and putting them under surveillance in the event of contamination or suspected contamination. Fines for not respecting these provisions are between TND 1,000 and 5,000 and could double in the case of recurrence.
• On 19^th April 2020, Tunisia government announced an extension of the lockdown until May 03. The head of Tunisia government announced that the hours of the night curfew will be eased during the holy month of Ramadan (from 20 hr in the evening until 6 hr in the morning).
• On 22^nd April 2020, Tunisia government made an announcement that period of deconfinement will be spread over several phases from starting from May 04 until the end of June 2020. The procedure of deconfinement will revolve around 5 axes 2020, The application of health measures and preventive standards; The adaptation of the transport system; The application of prior authorizations; The strengthening of control mechanisms; The revision of working hours to avoid congestion in workplaces and transport.
• On 29^th April 2020, Tunisia government announced that the deconfinement will be done gradually in three stages. The government's targeted containment plan stipulates the obligation to wear masks and social distancing. In first instance, deconfinement will exclude persons aged 65 and above, children below 15 years, pregnant women, persons with a fragile health condition and chronically ill people.
• On 02^nd May 2020, Tunisia government adopted a decree-law which specifies different population groups that are required to remain in confinement during the deconfinement period (after May 04). These include elderly people, children below 15 years and chronically ill people.
• On 04^th May 2020, Start of the deconfinement period.
• On 13^th May 2020, The hours of the night curfew are further eased from 23 hr in the evening until 5 hr in the morning.
• On 14^th May 2020, Tunisia government announced that deconfinement will also include elderly people (aged 65 and above) and children below 15 years starting on May 18.
• On 08^th June 2020, Tunisia government announced the end of the night curfew.
• On 14^th June 2020, End of the third (and final) phase of deconfinement.

Travel bans/restrictions

• On 13^th March 2020, Maritime borders are closed. 14 days of quarantine for travellers coming from specific countries (e.g., China, Italy, Iran, France and several other countries).
• On 16^th March 2020, Aerial and land borders are closed. Borders remain open for repatriation of Tunisian citizens and trade in goods.
• On 08^th April 2020, Further confinement measures are adopted by the government 2020, These measures will improve the process of granting traffic circulation permits during the confinement period; In addition, all travelling between governorates is prohibited.
• On 30^th April 2020, The Minister of Transport announces new provisions concerning (public) transport including taxis starting when the deconfinement period starts on May 04. Drivers and passengers will have the obligation to wear a protective mask. Individual taxis will be allowed to transport two people, but only placed in the back side (this was one person during the confinement period). Collective and hire taxis will also be authorized to resume their operations, with only half of the passengers and an tariff revised upwards. This rising tariffs are in place to share the burden between taxi owners and their clients. The Tunisian Transport Company (Transtu) announced new preventive measures that will be in place as of May 04 in the different governorates of Greater Tunis to reduce transport capacity by 50%.
• On 14^th May 2020, The government announces that travelling between governorates is prohibited during the celebrations of the end of the holy month of Ramadan (Eid al-Fitr).
• On 21^st May 2020, The government announces that the mandatory quarantine period for people entering the country from abroad (e.g., repatriated Tunisian citizens) will be reduced from 2 weeks to 1 week. The costs to cover the expenses of quarantine stays in modified hotels will soon be in charge of the persons themselves. All persons from abroad will be subjected, at the beginning of their quarantine, to a medical analysis, then to a second medical analysis at the end of confinement. If the test results are negative, the person can leave from the quarantine.
• On 01^st June 2020, The national commission in charge to combat the Covid-19 has decided to open the land, air and sea borders on June 27.
• On 04^th June 2020, Start of the third phase of the progressive deconfinement period (until June 14). The government announces that that wearing protective masks is compulsory in public transport which will work at 50% of its capacity. Travelling between governorates is allowed again without prior authorisation request. The government also announces that people coming into Tunisia from abroad need to show proof of payment of the hotel where they will go into a one-week mandatory quarantine. In addition, people need to show the negative test result of a Covid-19 test (from a test taken maximum 72 hours before) and fill in a questionnaire about their health status.
• On 08^th June 2020, The Ministry of Transport announces that public transport, such as trains and buses, operating within governorates and urban areas are allowed to carry again 100% of the number of passengers of original capacity. The 50% increase in the tariffs of collective and hire taxis, put in place in beginning of the deconfinement period, is cancelled again.
• On 09^th June 2020, The Ministry of Health announces that babies, children under ten and their parents, as well as people with a fragile health are exempt from compulsory confinement when entering Tunisia from abroad, but have to show negative test results to proof that they are not carriers of the virus.
• On 12^th June 2020, The Ministry of Transport and Logistics allows the resuming of internal flights.
• On 18^th June 2020, The compulsory one-week quarantine procedure for Tunisians returning from abroad and the self payment of the hotel is abolished and replaced by self-quarantine for a period of 14 days. People coming from abroad must show negative Covid-19 test results from a test taken maximum 72 hours before.
• On 24^th June 2020, The government publishes the sanitary and hygiene measures for people entering the country when the borders reopen on June 27. Countries of origin are classified by colour according to the status of the Covid-19 crisis in these countries and updated weekly according to the development of the epidemic situation. People coming from countries with a low contamination rate (green category) will not be required to undergo any health measure. People coming from countries in the orange category (countries with moderate contamination) must present results of a Covid-19 test taken maximum 72 hours before flight time. People entering Tunisia from countries in the orange category will have the choice to spend the quarantine period at home or a hotel. Tunisian citizens or foreigners with a residence in Tunisia will be required to stay in quarantine for 14 days and will have to repeat Covid-19 tests if symptoms of the virus appear. Those wishing to spend their quarantine at a hotel will have the possibility to leave the hotel and visit tourist places while respecting the sanitary protocol. All people entering the country will be required to complete a form to provide details on their medical condition before leaving the country of origin. Persons placed in quarantine may carry out a second Covid-19 test, at own cost, six days after the date of their arrival. The result of this test will determine if it is possible to end the quarantine period. For countries not appearing in the green or orange categories, the opening of borders is only allowed for Tunisian citizens resident in these countries. They must present the results of a Covid-19 medical test taken maximum 72 hours before their arrival and go into a mandatory quarantine of 7 days in a specialized centre, at their expenses. At the end of the first week, a Covid-19 test is performed, free of charge, after which a second 7-day quarantine period must taken into account at home.
• On 25^th June 2020, The Ministry of Health publishes the first list of countries by colour (green and orange) according to the status of the Covid-19 crisis in these countries.
• On 27^th June 2020, Aerial, land and maritime borders reopen.
• On 01^st July 2020, The director of the Covid-19 containment commission within the Ministry of Health indicates that the validity of the Covid-19 tests, initially fixed at 72 hours, has been extended to 120 hours for people entering the country.
• On 02^nd July 2020, Children below the age of 12 year are allowed to board on flights without showing the negative test results of the Covid-19 test before.
• On 03^rd July 2020, The Tunisian government announces that Tunisians returning from abroad or foreigners residing in Tunisia entering from countries where the propagation of the virus is moderate, are exempted from performing the mandatory Covid-19 test if it is not possible to perform these tests in these countries. These people are requested to spend a mandatory 10-day quarantine at own costs in a dedicated quarantine centre.

Closure of schools/universities

• On 12^th March 2020, Schools have been closed and remain closed since then.
• On 29^th April 2020, The Minister of Education announces the end of the 2019-2020 school year for all levels of education except for students in the final year of high school (baccalaureate) who will resume courses to complete the program and candidates for the end of basic education exam (9th year) and students participating in the access to the concours competitions. Students for the baccalaureate exam will resume classes from May 28 to June 23 and exams are scheduled between July 08 and 15 in a reduced format (for example, no sports exam).
• On 21^st May 2020, The government announces the re-opening of universities for June 08.
• On 28^th May 2020, The return to schools for high-school students of the baccalaureate year. All students, teachers and management who live in governorates other than those in which they study or work were subjected to rapid screening tests.
• On 08^th June 2020, The gradual re-opening of 200 higher-education establishments. Students are required to wear protective masks.
• On 08^th July 2020, Start of the baccalaureate exam for more than 133 thousand students. Strict sanitary measures are applied to limit the spread of the Covid-19 virus. Measures include, among other things, disinfecting examination centres, limiting the number of candidates per room and the obligation to wear protective masks.

Cancellation of public events / Closure of public places

• On 13^th March 2020, The government announces the following measures: banning of all gatherings in crowded places, workdays are shortened to five hours, all sports events are suspended, and the use of smoking pipes is prohibited.
• On 08^th April 2020, Further confinement measures are adopted by the government: Stricter fining of citizens that do not respect confinement rules; The isolation of virus-affected clusters announced by the Ministry of Health; April 10 is, exceptionally, decreed to be a day off to limit circulation.
• On 21^st May 2020, The government announces that mosques, cultural establishments and museums, will re-open in the third phase of deconfinement (from June 04-14) with a capacity limited to 50%.
• On 02^nd June 2020, The Ministry of Health, in coordination with the Ministry of Religious Affairs and the Institute for Occupational Health and Safety, publishes a health protocol in anticipation of the reopening of places of worship.
• On 04^th June 2020, Start of the third phase of the progressive deconfinement period (until June 14). Mosques and places of worship will reopen taking into account sanitary measures.

Obligatory shut down of economic activities

• On 24^th March 2020, The Ministry of Industry and SMEs announces that companies can submit a request to obtain special authorisation to continue operations under a limited format (15% maximum of employees) to perform or produce only essential services and goods for the economy, for example within the energy, food, cargo transportation, health and medicines sectors.
• On 19^th April 2020, The government plans a progressive easing of the confinement restrictions depending on sectors, regions and other specificities after May 03. A few industrial sectors will be allowed to resume operations at the end of the confinement, such as the automotive, textile and ago-food sectors.
• On 23^rd April 2020, The Ministry of Local Affairs announces that additional sanitary measures will been taken during the holy month of Ramadan (starting April 24) to ensure hygiene in markets and businesses operating in the open air.
• On 29^th April 2020, The government announces that the deconfinement will be done gradually in three stages. The 1st deconfinement phase (May 04 - 24) will concern 50% of public services, 50% of industries, 50% of the services sector, 50% of building and public works sector, 100% of liberal professions (except hairdressers and beauty salons), and 100% of the trade sector (except clothing, shoes and supermarkets). In the 2nd phase (May 24 - June 04), the sectors having resumed their activities during the 1st phase for 50%, will be able to pass to 75% of their capacities. Certain religious (such as praying in mosques), cultural, sporting, leisure and tourist activities may resume. In addition, restaurants, cafes, weekly markets and shopping malls may reopen. In the 3rd phase (June 04 - 14), the above-mentioned sectors will be able to pass to 100% of their capacities, and nurseries and kindergartens will be able to reopen as well.
• On 01^st May 2020, The Minister of Public Affairs announces that public sector workers will work based on a system of alternation during the first stage of deconfinement (May 04 - 24). The daily number of workers present at the workplace should not exceed 50% of the total staff and public sector workers must obtain prior authorization to travel to work places.
• On 04^th May 2020, Artisans and the import and export sector can resume operations.
• On 11^th May 2020, Beauty salons, hairdressers and clothing stores can re-open. Opening will be based on a rotation system, one day of working followed by a day of closure.
• On 15^th May 2020, Big supermarkets, commercial centres and weekly markets can re-open.
• On 18^th May 2020, The Ministry of Cultural Affairs authorizes private cultural spaces and businesses to resume their activities in accordance with targeted containment measures.
• On 26^th May 2020, The industry, services and public works sectors are allowed to increase their activity capacity to 75%. Kindergartens are also allowed to re-open on a reduced capacity. Cafes and restaurants will be able to serve take-away food and drinks. The government had announced earlier that cafes and restaurants will be allowed to re-open fully in the third phase of deconfinement (from June 05-14) in reduced capacity.
• On 27^th May 2020, The Ministry of Tourism announced the finalization of a new Health Protocol for the tourism sector put in place by the Tunisian National Tourist Office and approved by all stakeholders. Tourist operators are required to apply it from June 04 to the opening of their establishments. This protocol includes measures to be adopted by clients and hotel staff, such as the compulsory wearing of protective masks during excursions, the provision of hydro-alcoholic gel, compliance with the 50% capacity in terms of accommodation and catering as well as distancing and the prohibition of any show produced in a closed place.
• On 04^th June 2020, Start of the third phase of the progressive deconfinement period (until June 14). The public works, construction, industry, services and public service sectors will resume activity at 100%. Banquet halls to host big events (e.g., weddings) are allowed to resume operations at 50% of their capacity for covered spaces and 100% for open spaces. Sports activities can resume without audiences. Finally, cafes, tearooms, restaurants, hotels, mosques and places of worship will also reopen taking into account sanitary measures.
• On 06^th June 2020, The government adopts a decree-law which brings back normal working hours for public sector workers as of June 08.
• On 14^th June 2020, End of the third (and final) phase of deconfinement. Sectors are allowed to return to full capacity. Cinemas also re-open.

3. Coronavirus (COVID-19) Related Fiscal Policy Measures by Tunisia

Overall fiscal measures

• On 21^st March 2020, Tunisia government announces a series of economic and fiscal measures amounting to an estimated TND 2,500 million.
• On 25^th March 2020, Italy provides a EUR 50 million (around TND 157 million) loan to the BCT to support Tunisian companies and cushion the socio-economic impact of the crisis.
• On 31^st March 2020, The EBRD announces an allocation of EUR 400 million (around TND 1,280 million) to support Tunisia's financial companies, SMEs and public institutions.
• On 03^rd April 2020, Tunisia government announces a series of complementary economic and fiscal measures to an estimated TND 500 million.
• On 03^rd April 2020, The World Bank announces to make an envelope available of TND 40 million (around EUR 13 million) for Tunisia to be used by the Ministry of Health for the acquisition of medical treatment and equipment to the fight the Covid-19 virus.
• On 06^th April 2020, The EU will strengthen the "Health / Essaha Aziza" program by tripling the funds (donations) allocated to it from EUR 20 million to EUR 60 million for all governorates.
• On 10^th April 2020, The IMF announces the approval of the USD 745 million (around TND 2,200 million) emergency assistance loan to provide additional resources for the health sector, social safety nets, and businesses hit by the crisis. It will also ensure an adequate level of international reserves.
• On 15^th April 2020, The Ministry of Professional Training and Employment announces that the French l'Agence francaise de développement (AFD) will make an envelope available of USD 9 million (around TND 26 million) to support employment.
• On 17^th April 2020, US AID announces to make a total envelope available of TND 1 billion (around EUR 315 million) for the coming five years to support Tunisia's economy and its democracy.
• On 22^nd April 2020, The European Commission adopts a macro-financial assistance (MFA) package of EUR 3 billion for 10 partner countries. The amount allocated to Tunisia will be EUR 600 million (TND 1.9 billion). The MFA funds will be made available for 12 months in the form of loans on highly favourable terms to help cover immediate, urgent financing needs. The first instalment could be as soon as possible, whereas the second instalment is expected to take place in 2020Q4 or 2021Q1.
• On 30^th April 2020, The World Bank announces to make available an additional envelope of TND 62 million (around EUR 20 million) for Tunisia to be used by the Ministry of Health for the acquisition of medical treatment and equipment to the fight the Covid-19 virus. The announcement comes in addition to the announced help in the beginning of April.
• On 29^th May 2020, The Arab Monetary Fund grants a structural adjustment loan of USD 98 million (around TND 277 million) to Tunisia to face impact of the Covid-19 crisis and support a reform program of the banking and financial sector.
• On 01^st June 2020, France, via its French Development Agency (AFD), announces to make available EUR 80 million (around TND 256 million) to support the government of Tunisia's plan to fight the health, budgetary, economic and social effects of the Covid-19 crisis.
• On 03^rd June 2020, The African Development Bank Group (ADBG) approves a loan of EUR 180 million (around TND 575 million) for Tunisia to cope with negative health, budgetary, economic and social effects of the Covid-19 crisis.
• On 03^rd June 2020, The Arab Monetary Fund grants another loan of USD 59 million (around TND 167 million) to Tunisia, to support financial and other urgent needs.
• On 08^th June 2020, The government approves the use of a loan from the Arab Fund for Economic and Social Development (AFESD) of 30 million Kuwaiti dinars (around TND 280 million). It is part of a funding program to offset social and economic repercussions from the Covid-19 crisis.
• On 12^th June 2020, The World Bank approves a loan of USD 175 million (around TND 496 million) in budget support to help Tunisia protect vulnerable businesses and households from the effects of the Covid-19 crisis and to carry out essential economic reforms to improve the country's recovery potential after the crisis, as well as its competitiveness. The funding is part of a coordinated international support program to which the World Bank, German Development Bank KfW, the French Development Agency (AFD), the Japanese Agency for International Cooperation (JICA) and the African Development Bank contribute.
• On 22^nd June 2020, The President of the France announces a loan of EUR 350 million (around TND 1.125 billion) for the benefit of Tunisia, to cope with the post-Covid-19 virus period and to support the Tunisian health sector.

Health system measures

• On 21^st March 2020, Tunisia government announces that an envelope of TND 500 million will be created to strengthen the strategic reserves of, among other things, medicines. The government also announces the creation of a TND 100 million special fund to purchase equipment for public health establishments.
• On 23^rd March 2020, The Central Bank of Tunisia (BCT) authorised a TND 50 million loan (EUR 15.5 million) to the Ministry of Health to buy medical equipment to fight the Covid-19 crisis.
• On 26^th March 2020, The Ministry of Health announces to make 2,000 ICU beds available to cope with the Covid-19 crisis.
• On 28^th March 2020, The Minister of Health announces the purchase of 500,000 test kits.
• On 06^th April 2020, The Ministry of Industry and SMEs calls for industries specializing in the textile sector to support the national effort to manufacture reusable masks also to prepare for the period after the confinement ends and the wearing of masks is assumed to become mandatory.
• On 07^th April 2020, The Ministry of Defence announces that a first military plane has left to China to transport medical equipment back to Tunisia.
• On 08^th April 2020, Further confinement measures are adopted by the government 2020, The training of a work team at the level of the Ministry of Industry and SMEs to organize the manufacturing of medical masks, distribute these and fix their prices.
• On 11^th April 2020, A commercial airplane comes back from China with 27 tonnes of medical equipment of which 5 million masks.
• On 19^th April 2020, The head of the government announces that 200,000 test kits will be available the coming week to perform targeted testing on a larger scale.
• On 20^th April 2020, The Tunisian Hotel Federation announces that 6,230 hotel rooms, in hotels across the country, are made available to the Ministry of Health for medical teams and repatriated Tunisians citizens who are put into a sanitary isolation.
• On 23^rd April 2020, The Ministry of Industry and SMEs announces the start of a new online platform to register supply and demand needs for medical equipment. Tunisian companies can register and indicate their help to produce medical equipment and their potential capacity.
• On 24^th April 2020, The US government announces to make available USD 25 million (around TND 72 million) for the prevention and fight against Covid-19 in Tunisia. This funding will be used to increase laboratory capacity, for infection prevention and control, create access to vital medical services and basic necessities for children from vulnerable families, and offer psycho-social support to affected families.
• On 25^th April 2020, The Ministry of Health announces the launch of a digital training and learning platform on the coronavirus, for the benefit of healthcare professionals and the general public. This is a joint collaboration between the Ministry of Health and the World Health Organization (WHO).
• On 27^th April 2020, The Ministry of Human Rights announces the launch of a web application to help stranded foreigners in Tunisia. It is aimed at foreigners in fragile financial situations, for example, students, emigrants and asylum seekers. The application will make it possible to receive requests for assistance and donations.
• On 29^th April 2020, The Ministry of Health announces the arrival of 10 tons of medical equipment from Qatar.
• On 30^th April 2020, The French Ministry of Europe and Foreign Affairs, announced a donation of medical equipment (including protective suits and surgical gloves) to the Tunisian Ministries of Internal Affairs and Foreign Affairs.
• On 30^th April 2020, USAID starts the distribution of medical equipment (e.g., sterilization equipment for municipal agents such as uniforms, gloves, sprays) to support 151 Tunisian municipalities in the sanitary crisis.
• On 02^nd May 2020, A second plane with medical aid including a mobile military hospital with a capacity of 100 beds and medical equipment arrived from Qatar.
• On 04^th May 2020, Germany announces the donation of laboratory diagnostic equipment to Tunisia for evaluation of samples related to Covid-19 virus testing.
• On 11^th May 2020, The WHO announces that it has made available an envelope of USD 1 million to help Tunisia acquire medical equipment and testing kits.
• On 14^th May 2020, The Embassy of China in Tunisia announces the donation of medical equipment to cope with the Covid-19 virus. The donation includes, among other things, (surgical) masks, gloves and test kits.
• On 17^th May 2020, An airplane from Turkey with medical equipment (such as surgical masks) arrives in Tunisia.
• On 19^th May 2020, The German Corporation for International Cooperation (GIZ) does a donation of medical equipment to 41 Tunisian municipalities. The donation is financed by the German Ministry of Economic Cooperation and Development and is intended for public agents responsible for collecting household waste and consists of protective glasses and glove.
• On 05^th June 2020, Tunisia receives a donation of medical equipment (such as surgical masks and gloves) from The United States and another donation from the United Nations Children's Fund in cooperation with Japan and Sweden.
• On 09^th June 2020, Tunisia receives a donation of TND 13 million from Japan to help acquire medical equipment to control the spread of the Covid-19 virus and further strengthen the health sector.
• On 17^th June 2020, Tunisia receives a donation of medical equipment (such as testing kits) from Germany.
• On 23^rd June 2020, A donation of medical equipment (such as respirator machines) arrives from France.

Income support measures for individuals and households excluding tax and contribution changes

• On 21^st March 2020, The government announces an envelope of TND 150 million for social assistance.
• On 31^st March 2020, The Ministry of Finance announces the extension of the payment period for car vignettes (from 5 April to 30 April).
• On 31^st March 2020, The Director General for Protection and Social Integration announces that the first beneficiaries of social measures are families with children (without family support under the supervision of the National Institute for Child Protection) and/or families with old people. These families will benefit from an aid of TND 200 dinars (around EUR 64).
• On 03^rd April 2020, The government announces an additional social aid of TND 100 million (on top of the TND 150 million announced on March 21) to the most vulnerable people. Employees in technical unemployment will receive up to TND 200 per month, while retirees who receive a pension = TND 180 will receive financial assistance of TND 100 per month. Poor families and those with a dependent disabled person will benefit from TND 200 in social assistance, distributed as of April 03.
• On 06^th April 2020, The Ministry of Energy, Mines and the Energy Transition announces a downward adjustment in the price of certain petroleum products starting on midnight April 07. This is the result of the announcement of the Ministry of Finance, at the end of March, for the establishment of a new mechanism for fixing fuel prices at the pump to reflect the reductions in the price of a barrel of oil.
• On 14^th April 2020, The signing of a wage agreement to maintain the payment of private sector wages for the month of April between the Ministry of Social Affairs, the General Union of Tunisian Labour (UGTT) and the Tunisian Union of Industry, Commerce and crafts (UTICA)). The State will transfer TND 200 whereas the remainder of the wage will be taken into charge by the companies. The agreement also provides assistance to employees not declared to the National Social Security Fund (CNSS), provided that the employer declares them within a period not exceeding 30 days, starting from the date of entry in force of the decree-law.
• On 19^th April 2020, The government announces a new tranche of social assistance. This second tranche is directed to poor families, disadvantaged categories and certain retirees. TND 60 (around EUR 20) will be granted to poor families for the holy month of Ramadan and TND 200 will be paid to the more fragile classes. Exceptional social assistance will also be paid to retirees starting from May. In total, 140,000 retirees with a pension below TND 180 will benefit from exceptional social assistance of TND 100.
• On 22^nd April 2020, A wage payment agreement is signed between the Ministry of Tourism and Handicrafts, the Tunisian Hotel Federation (FTH) and the Tunisian General Labour Union (UGTT). For the month April, the state will pay hotel employees an exceptional contribution of TND 200 (around EUR 64). Employers will pay 65% (or the equivalent of 17 working days) of the employees' actual salary. A similar agreement is signed on April 23 between UGTT and the Tunisian Federation of Travelling and Tourism Agencies (FTAV).
• On 24^th April 2020, The Office for Tunisians Abroad (OTE) announces that an aid of TND 400,000 will be made available to Tunisians abroad to help cope with the impact of the Covid-19 crisis. This mostly concerns Tunisians stranded abroad, students without scholarships and migrants. Disbursements are treated on a case-by-case basis.
• On 05^th May 2020, The Ministry of Social Affairs announces an exceptional income support of TND 60 for the benefit of poor families for the occasion of the end of the Ramadan (Eid al-Fitr). This support comes in addition to the support allocated for the month of May.
• On 12^th May 2020, On the occasion of the end of the Ramadan, the government announced an exceptional income support of TND 70 (around EUR 22) to workers losing their jobs as a result of the health crisis.
• On 29^th June 2020, The Minister of Finance announces a series of measures in favour of Tunisian residents abroad, namely-
  • To make money transfers, without paying transfer fees, provided they go through the Tunisian Foreign Bank (TFB).
  • The possibility of granting interest-free loans for a maximum amount of TND 6 000 repayable over 12 months to enable the purchase of tickets from Tunisair or Tunisian Shipping Company (CTN).
  • The possibility to pay the monthly circulation tax for one month instead of one full year for Tunisians residing abroad but spending more than 3 months in Tunisia.

Tax and contribution policy changes

On 13^th April 2020, The government adopts a first series of decree-laws to cope with the Covid-19 crisis, such as social measures to support companies and their employees, as well as exceptional measures for self-employed individuals. These include the deduction of one working day for the year 2020 for the benefit of the state's budget. This contribution concerns individuals among employees and pensioners of Tunisian nationality, excluding those whose annual net income is below TND 5,000 (around EUR 1,580) and private sector employees of companies affiliated to the CNSS and whose activity is temporarily interrupted because of total lockdown.

Public sector subsidies to businesses

On 21^st March 2020, The government announces the following economic and fiscal support measures for businesses, in particular SMEs:

• Creation of a support fund for SMEs of TND 300 million.
• The decision to take charge by the State of part of the interest rate (until 3%) on investment loans.

Deferral of taxes and social security contributions and bringing forward expenditures within current fiscal year

• On 21^st March 2020, Tunisia government announces the following series of economic and fiscal measures mostly for firms. Support measures for businesses, in particular SMEs, include:
  • The postponement of the filing of corporate tax declarations until the end of May 2020 (originally due March 25), except for companies subject to the company tax of 35%. Reduction of the deadlines for refunding tax credits to a maximum of one month.
  • For the most affected companies, there is an allowance to reschedule tax debts over a period of up to 7 years while cancelling the application of penalties in the case of delayed payments for a period of 3 months; allow the refund of the VAT credit within a maximum of one month.
  • For the public health sector 2020,
  • Exemption from VAT for drug distributing companies.
• On 02^nd April 2020, The government announces the launch of web portals to help crisis-affected artisans, traders, SMEs and other companies. The companies concerned must be affiliated to the National Social Security Fund, or will be affiliated within a maximum period of one month from the date of government publication. The conditions require that the company's employees be registered and their wages declared to the National Social Security Fund for the fourth quarter of 2019 or the first quarter of 2020. The companies concerned must also provide the necessary documents proving financial difficulties, the decline in activity and liquidity difficulties. Maintaining employees, whether indefinite or fixed-term, of the entire workforce of the company whose employment contracts are in force on the date of the government decree coming into force, is one of the conditions.
• On 03^rd April 2020, The government announces the additional measure of TND 100 million to cover partial unemployment for the benefit of artisans and SMEs.
• On 13^th April 2020, The government adopts a first series of decree-laws to cope with the Covid-19 crisis, such as social measures to support companies and their employees, as well as exceptional measures for self-employed individuals. These include: The temporary social measures to protect businesses and their employees affected by the total lockdown 2020, provisional and exceptional indemnities as well as the deferral of payment of contributions payable by employers in the statutory social security scheme for 2020Q2, for three months without penalties for a delay. This decree-law defines affected companies as being those companies affiliated to the National Social Security Fund (CNSS) and whose activity is temporarily interrupted because of total lockdown.
• On 08^th May 2020, The government publishes 2 decrees to specify which companies can benefit from fiscal and financial measures to alleviate the impact of the Covid-19 crisis. These measures include the provisional cancellation of fines for the late payment of taxes and credit lines to be used for the refinancing of rescheduled credits for the benefit of SMEs. The decree states that sole proprietorship businesses can benefit from these measures, whereas companies subjected to the flat-rate scheme, oil producing companies and companies subjected to an income tax rate of 35% are excluded.

Public sector loans or capital injections to businesses

• On 21^st March 2020, Tunisia government announces the following economic and fiscal support measure for businesses, in particular SMEs, include:
  • Creation of an investment fund of TND 500 million to strengthen companies' capital and safeguard jobs and another TND 100 million fund to facilitate share redemption.
• On 17^th April 2020, Tunisia government announces a reform plan for the public airline company Tunisair, including financial support, to prepare it to the post Covid-19 era.
• On 28^th April 2020, Tunisair announces an exceptional and temporary reduction of 50% in the salaries of its employees based abroad.
• On 05^th May 2020, The Ministry of Finance has decided, with the Tunisian Solidarity Bank (BTS) and the Ministries of Social Affairs and Transport, to allow taxi owners of all types (individual, collective, rural transport and hire) to benefit from current loans at reduced rates via the BTS. These loans will be allocated to pay the insurance costs for a full year, with two months of grace period and without commissions or additional costs.
• On 06^th May 2020, The government adopts several economic measures to support the media sector, such as 2020, The state will commit to pay 50% of the broadcasting costs of the year 2020 for all the private radio and TV channels; And a budget allocation of TND 5 million for the financing of the sector's digital transition process.
• On 08^th May 2020, The Minister of Women, Family, Children and the Elderly announces that, in cooperation with the Tunisian Solidarity Bank (BTS) and professional microfinance associations, a line of financing, will be placed under the supervision of the Ministry to grant loans to household helpers to help repay debts and offer support through the current economic crisis situation. This agreement enables the opening of a credit line for maximum TND 1000, repayable over 24 months, with a 2-month grace period.
• On 18^th May 2020, Tunisia government announces measures to support the non-regular transport sector, car rental companies and car-driving schools with the goal to preserve the sustainability of these sectors. Professionals in these sectors have the possibility to obtain credits until TND 3000, and a second credit not exceeding TND 1000 with a fixed rate of 5% and a grace period of two months. Apart from this, professionals will be able to profit from a new aid of TND 200.

Loan guarantees by the state benefiting private borrowers

• On 21^st March 2020, Tunisia government announces the following series of economic and fiscal measures mostly for firms. Support measures for businesses, in particular SMEs, include-
  • For hotels, travel agencies, tourist restaurants, crafts, transport and cultural activities 2020, implementation of exceptional management credit procedures until December 31, 2020, with the possibility of reimbursement over 7 years. A fund of TND 500 million will be allocated to these credits.
• On 18^th April 2020, Tunisia government adopts a decree-law to launch the guarantee mechanism of TND 500 million (announced on March 21) for management and operating credits granted by banks to businesses affected by Covid-19 crisis. The fund guarantees new credits granted during the period from March 01-December 31 2020, provided that these credits are reimbursed during a period of 7 years with a two-year grace period.
• On 03^rd May 2020, The Minister of Finance specifies the conditions for crisis-affected companies to be able to benefit from the credit guarantee mechanism. A company is considered to be affected if it records a decline of at least -25% in turnover in March 2020 (year-on-year), or -40% in April 2020 (year-on-year). The state guarantee will amount to 70-90% of the total credit amount, via the Tunisian Guarantee Company (SOTUGAR). Participating banks must offer a rate that does not exceed a rate equal to the average monthly money market rate +1.75%.
• On 20^th May 2020, The head of the Tunisian Guarantee Company (SOTUGAR) specifies further the conditions which apply for the credit guarantee mechanism 2020, The amount of credit cannot exceed TND 1 million per individual company. The amount of the credit must not exceed 25% of turnover excluding VAT and the equivalent of the payroll for six months for companies created after January 2019.
• On 21^st May 2020, The Minister of Tourism and Handicrafts announces the set up of a credit line of TND 500 million for hotel establishments affected by the Covid-19 crisis to pay salaries of their employees. This line of credit will be open until March 2021, granted at an interest rate of 2%, with a repayment period of 7 years and a two-year grace period. In addition, a financing line of TND 300 million is set-up to support other companies operating in the tourist sector (e.g., travel agencies).
• On 27^th May 2020, Tunisia government officially announces the increase of the total amount of the credit guarantee mechanism from TND 500 million to TND 1500 million. The increase includes the new credit lines for the tourism sector announced on May 21. The government has also allocated TND 200 million for resources from the state budget to support the credit guarantee mechanism for the affected sectors and businesses.
• On 19^th June 2020, First meeting of the national committee with the task to approve that the state will take charge of the difference between the interest rate on investment loans and the average money market account rates (MMR) for the benefit of SMEs. The maximum guarantee will be 3% and intends to reduce the interest costs crisis-affected for SMEs. It will apply to investment loans with a profit margin not exceeding 3.5% and that are granted in the period from January 2019 until the end of 2020.

4. Coronavirus (COVID-19) Related Monetary Policy Measures by Tunisia

Monetary policy

• On 17^th March 2020, The Central Bank of Tunisia (BCT) cuts its main policy rate by 100 basis points to 6.75%.
• On 17^th April 2020, The BCT publishes a circular in which it is stated that, under exceptional circumstances, banks are allowed to submit assets as collateral for refinancing operations that do not meet usual eligibility criteria. This is to assure adequate refinancing operations for the banking system as a whole. A new one-month financing instrument is accepted to support the needs of banks and financial institutions.
• On 30^th June 2020, The BCT publishes a circular to specify conditions of the one-month refinancing instrument set up since April 17. The characteristics and operating methods of this instrument are as follows –
  1. Objective - Provide banks and financial institutions with the necessary liquidity to support them with the effects of the Covid-19 crisis and ensure business continuity to finance their customers.
  2. The renewal of operations will be carried out on a monthly basis, until full amortization of the financing accepted under this instrument.
  3. The rate applied to these operations will be a fixed interest rate equal to the weighted average rate of the last 7-day call for tenders plus a margin of 10 basis points.

Prudential regulation

• On 19^th March 2020, The BCT announces measures to smoothen payment systems 2020, no commission for interbank cash withdrawals from ATMs; the suspension of any commission applied to electronic payments for transaction less than or equal to TND 100 (about EUR 32); the provision of free prepaid bank cards by banks. It also recommended local banks and financial institutions to reschedule annuities on company loans whose maturity is between March 17-September 30, 2020, on a case-by-case basis. Finally, loan-to-deposit ratio requirements for the banking sector are being eased.
• On 25^th March 2020, The BCT announces to postpone repayment of bank credits (principal and interest) due in the period March 1-30 September 2020 for non-professional loans granted to customers with a monthly income below TND 1,000 (EUR 317).
• On 01^st April 2020, The BCT announces the following measures-
  • Banks are allowed, for 3 months, to extend the principal and interest payments on loans due during the period from April-June 2020, to individuals whose monthly net income exceeds TND 1,000 dinars (initially was only for individuals with net income < TND 1,000).
  • The BCT will make money transfers, in advance, to students studying abroad and professionals following training abroad to cover the subsistence costs for schooling and professional training for the months May-June.
  • The BCT authorizes banks and financial institutions that cannot organize their general assembly meetings, to postpone it beyond the legal deadline set on April 30, 2020.
  • The BCT calls for banks and financial institutions to suspend all dividend distribution measures for the 2019 financial year and to refrain from carrying out any operation to buy back shares.
• On 13^th April 2020, The BCT calls for the application of a uniform and transparent standardized method for all banks for the postponement in repayment of clients' credits. No increase in the monthly reimbursement charge or additional costs should occur.
• On 15^th May 2020, The BCT publishes a circular with the purpose to promote the development of digital payments and financial inclusion and reduce the use of cash. It aims to establish a structured and standardized framework for mobile payment services, standardize minimum requirements market players in the mobile payment services industry, promote the security and efficiency of mobile payment and strengthen user confidence in this these new means of payment.
• On 28^th May 2020, To ensure the sustainability of the economic fabric and to preserve financial stability, the BCT publishes a circular allowing banks to grant businesses and professionals with exceptional new financing covering exclusively needs linked to operating cycle. The amount of exceptional financing and the duration of repayment will be fixed on a case-by-case basis, respecting the following rules 2020, The amount of funding must not exceed the ceiling of 25% of turnover excluding tax in 2019, or the equivalent of the wage bill for 6 months for companies that started operations after January 2019; The repayment period must not exceed 7 years including a two-year grace period. Exceptional financing granted during the period from March-December 2020, will be accepted as collateral for bank refinancing operations taking into account the client's risk classification.
• On 18^th June 2020, The BCT publishes circular 2020-14 specifying the conditions and management methods of the endowment line intended for rescheduling loans granted by banks for the benefit of crisis-affected SMEs. The total amount of the endowment line is fixed at TND 300 million and refinancing will concern the rescheduling of credits granted by the banks during the period from March 23-December 31 2020. Other conditions 2020, The fixed annual interest rate should not exceed the BCT's key rate plus 2%. The repayment period should not exceed 10 years including a maximum grace period of 2 years.
• On 30^th June 2020, The BCT publishes a circular to authorize money transfers by special intermediaries to students studying abroad to cover schooling tuition fees and living costs for the months July-August.

5. Coronavirus (COVID-19) Related Social Policy Measures by Tunisia

• There is a 300 million envelope for the benefit of technically unemployed workers, the first of which, according to the Finance Department's proposal, would be of interest to SMEs, with a view to strengthening the SME support fund, in addition to the implementation of the previous decision to provide a bonus of 3 points of interest.
• There is also a 150 million envelope for the benefit of poor and special-needs families that supports family programs that require direct assistance to individuals directly affected under the supervision of the Ministry of Social Affairs.

Source – With inputs from Organisation for Economic Co-operation and Development (OECD), International Monetary Fund, World Bank, International Labour Organization (ILO) and Government of Tunisia