Tunisia: model for emerging economies.

Summary: Mohamed Ghannouchi: Tunisia set up strategy to cope with international financial crisis.

Tunisia had spent around 0.6 percent of its GDP in supporting the companies affected by the global financial crisis, Mr Mohamed Ghannouchi, Tunisia's prime minister, said during Emerging Markets Summit in London organized by Economist. <p>At the beginning of the current year, Tunisia set up a strategy to cope with the international crisis. As part of this vision, measures have been taken to help the national enterprises to preserve the growth of the Tunisian economy, Mr Ghannouchi told Global Arab Network in an interview on the sideline of the summit.

Mr Ghannouchi added: "one more important programme of investments established in order to develop modern motorway, wide railway network, construct 2 power stations of 400 MW each, build an oil refinery in south of the country, launch a phosphate plant and create a deep-waters seaport."

All these investments were spent with the purpose of boosting local demand and offer better business opportunities.

The prime minister assured that his government is working to integrate Tunisia's economy into global market by implementing a programme with support of the European Union's fund, World Bank and the African Development Bank.

The aims of this programme are to make sure that all businesses are able to reduce transaction costs, optimise foreign trade measures and improve access to financial market.

Moreover, Tunisia empowered business environment to attract foreign direct investments (FDI) to its expanding sectors such as information and communication technologies, health, car industry, and electronics.

Mr Ghannouchi told a News Agency "Tunisia's growth is likely to reach 3-3.5 percent this year and at least 4 percent in 2010. Before (the global crisis) we were on a path to grow 6 percent, this year our growth will be between 3 and 3.5 percent,"

"In comparison with -4.0 percent for Europe, it is still positive and encouraging," Ghannouchi said.

Tunisia was looking for growth of 4 percent in 2010, he said, but a further improvement in the global outlook would help the domestic picture.

He said, "We can do even better if the world recovery is faster."

Ghannouchi said that the country was trying to diversify its exports, with more direction towards Africa and the Maghreb region, the Middle East and North Africa.

Tunisia, the North African country of 10 million people, relies on exports of manufactured goods and services, mostly to the European Union.

He said the government planned to make its currency, the dinar, fully convertible.

"I do hope to make sure it's converted as soon as reachable. We have made a lot of progress in that area."

Ghannouchi continued that he hoped international institutions would move fast to disburse an extra $850 billion in resources decided for the International Monetary Fund at the G20 Summit April 2009.

"We hope the measures agreed in London will be implemented effectively and as soon as possible."

He said that the trade exchange forces had been seriously shaken by the international financial crisis. The recession, which strongly hit the developed countries, had found its reflection in a great decline of foreign demand and a drop of approximately 12% of the world goods and services trade, compared with a sustainable growth during the last 25 years.

He highlighted the determination of the G8 and G20 to resort to a series of budget and monetary instruments in order to restore world demand, promote trade and investment and bring back growth and prosperity.

''This (determination) had allowed to restore the highly shaken trust of small investors and consumers and overall to record the beginning of a revival, whose most significant signs are the rise of stock exchange prices and oil prices '' the prime minister said.

Ghannouchi underlined during the conference that globalisation is far from representing a threat or a disadvantage but could provide vast opportunities of growth and progress for all, on condition that cooperation is established and regulations are settled, especially on the international financial levels, to preserve the merits of globalisation and enable the world economy to revive its progress.

Ghannouchi stressed during the conference that he would like to see closer cooperation between European Union and MENA region.

He emphasized that 1% growth in the southern Mediterranean countries reflected in 0.2 percent growth in the north-bank of the Mediterranean.

The Union for the Mediterranean, a project of French President Nicolas Sarkozy, was launched last year as a platform for regular gatherings among its 43 countries, with the EU providing financial and technical support to accelerate reforms and develop closer ties.

"We want the union to come into practice immediately, as strong sign, in order to establish more harmonious policies between South and North of the Mediterranean and eventually to achieve collective prosperity," Ghannouchi concluded.

Despite the global crisis, Tunisia has managed to preserve its economy, maintain the growth and retain the lead among the North African countries, according to the World Economic Forum Report 2009/2010.

These achievements place Tunisia among the emerging countries as a model of success.

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