Tunisia is not the only country whose debt is worrying, but the subject is particularly sensitive because, 150 years ago, in July 1869, the Tunisian debt was used as a pretext for the establishment of the International Finance Commission to reimburse European creditors (France, Great Britain and Italy).
The “system meant to bring proper supervision of Tunisian finances”, writes historian Sophie Bessis in her book Histoire de la Tunisie – De Carthage à Nos Jours, eventually led to the French protectorate. A century and a half later, as Tunisia’s foreign debt continues to grow, is the situation comparable?
“It is, and this worries me,” Moncef Marzouki, former president and a current presidential candidate, said back on 28 August when he spoke to foreign media. “History repeats itself. They [the creditors] will send someone, as in the Bey era, to manage due to the inability to pay the debt. It is first the intrusion of the financiers, then policies are laid down to establish a colonised state.” In less direct terms, many presidential candidates pointed to the empty state coffers as a rhetorical device.
From debt to protectorate
A first glance at the figures could support this thesis. In 1869, Tunisia’s annual debt amounted to between 150 and 161m francs, which, according to the Institut National de la Statistique et des Etudes Economiques, represents between 589m and 633m euros ($643m-$691m) today. In 2018, public debt reached 22bn euros (35 times more than in 1869), 70% of which is owed to foreign creditors.
“A comparison does not mean that history will repeat itself,” Sophie Bessis explains. “Even if the current debt is worrying, we are not on the verge of recolonisation. I can’t see the French, American or World Bank gunboats landing in the Gulf of Tunis.”
In her book, the researcher showed that half of the Regency’s income went to the “Comité de Contrôle de la Commission, which allocated it to service the debt that had been consolidated”. However, in 2018, external debt service accounted for less than 20% of tax revenue.
Between 1869 and 2019, five similarities
Should this be seen as an exaggeration related to the climate of the election campaign? Not quite, says Tarak Bouacida, an economist who studies Tunisian economic history in the 19th century, notably for the Tunisian Think Tank. He says that the comparison of raw figures makes no sense. The Regency managed only a fraction of the regalian functions – security, bureaucracy and part of justice – of the current state. “According to my calculations, at the end of the 19th century, the Tunisian government’s spending represented only 20% of today’s state spending,” explains Bouacida.
However, the specialist notes five similarities that would make the comparison between the two periods relevant: the weight of political reforms in the financial crisis, corruption, the lack of competitiveness of the economy, the explosion of debt and the importance of donors.
In the 1860s, Tunisia embarked on major and costly reforms leading to higher taxes, to the point where economic historian Abdelmajid Guelmani, cited by Sophie Bessis, denounced a “taxocracy”. From 2011, the decision of the new authorities to hire massively in the civil service weighed on state finances: in 2018, the public wage bill represented almost half of the budget, excluding debt service.