Is Tunisia the next emerging market to implode?
Seems like every few days a new developing country discovers that it can’t pay back the dollars and/or euros it borrowed back when “external foreign currency debt” seemed like a good thing. Next up: Tunisia, apparently. From today’s Wall Street Journal:
Nation That Sparked Arab Spring Finds Itself a Springboard for Illegal Migration
AL ATAYA, Tunisia—More than seven years after Tunisians overthrew their country’s dictatorship in a revolution that spawned the Arab Spring, the country’s economy is in crisis and thousands of people are sneaking into Europe, as part of a new wave of clandestine migration from what had been a North African success story.
The recent Tunisian exodus began in 2017 as economic pressures mounted on the country’s working and middle classes. Tunisians have enjoyed greater political freedoms since the Arab Spring uprising and Mr. Ben Ali’s fall, but a series of post-revolutionary governments have failed to revive the economy and create jobs. Today, more than 35% of Tunisian young people are unemployed, and many don’t see a future in their own country.
“The state isn’t giving us anything,” a 24-year-old mechanic in Al Ataya said, adding he had considered leaving on a smuggler’s boat until a shipwreck killed more than 100 people offshore in June.
In recent years, Tunisia’s government has tried to correct course. The government chose to cut budgets at the urging of the International Monetary Fund, which extended Tunisia a $2.9 billion loan in 2016.
But the IMF-led overhaul has failed to trigger a turnaround. The economy is currently growing at 2.8%, a slower rate than in 2010 before the uprising. Tunisia’s currency, the dinar, shed 21% of its value against the euro in 2017. When the cuts the IMF had urged took effect in January, a wave of protests shook the country, raising questions about the future of its democratic transition.
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