2017 Index of Economic Freedom

Tunisia

overall score55.7
world rank123
Rule of Law

Property Rights49.6

Government Integrity37.3

Judicial Effectiveness39.9

Government Size

Government Spending73.4

Tax Burden73.7

Fiscal Health53.4

Regulatory Efficiency

Business Freedom80.6

Labor Freedom56.1

Monetary Freedom75.9

Open Markets

Trade Freedom63.8

Investment Freedom35.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 11.1 million
  • GDP (PPP):
    • $127.0 billion
    • 0.8% growth
    • 1.5% 5-year compound annual growth
    • $11,428 per capita
  • Unemployment:
    • 14.8%
  • Inflation (CPI):
    • 4.9%
  • FDI Inflow:
    • $1.0 billion
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Economic dynamism remains constrained in Tunisia by institutional weaknesses that remain unaddressed, primarily because political instability has hindered decisive government action. The regulatory regime, despite some improvements, remains burdensome and deters dynamic entrepreneurial activity. The closed trade regime and rigid labor markets largely prevent the emergence of a vibrant private sector.

Reforms adopted in past years have failed to deliver tangible benefits to the stagnant economic system or trigger more rapid growth. Deeper reforms to enhance governance and strengthen the critical pillars of economic freedom are needed to push the economy along a positive path of transition.

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Background

Tunisia, birthplace of the Arab Spring, ousted President Zine al-Abidine Ben Ali in January 2011. Shortly thereafter, the formerly banned Islamist Ennahda Party won the largest number of seats in the National Constituent Assembly. The Ennahda government stepped aside in 2014 following ratification of a new constitution in January and was succeeded by an interim technocratic government led by interim Prime Minister Mehdi Jomaa. During the second half of 2014, Tunisia held its first full parliamentary and presidential elections under the new constitution. Beji Caid Essebsi, former prime minister and leader of the Nidaa Tounes party that he founded in 2012, was elected president in December 2015. Despite notable progress in democratization, social unrest has continued.

Rule of LawView Methodology

Property Rights 49.6 Create a Graph using this measurement

Government Integrity 37.3 Create a Graph using this measurement

Judicial Effectiveness 39.9 Create a Graph using this measurement

Although the judiciary is generally independent, protection of property rights remains uneven, hindered by corruption and lengthy case backlogs. Governmental weakness encourages graft at lower levels of bureaucracy and law enforcement. Long-standing public resentment of efforts against smuggling along the Libyan border, which eliminated local jobs, intensified in 2016 after the construction of a border wall to block infiltration by terrorists.

Government SizeView Methodology

The top personal income tax rate is 35 percent, and the top corporate tax rate is 30 percent. Other taxes include a value-added tax and a property transfer tax. The overall tax burden equals 22.5 percent of total domestic income. Government spending has amounted to 29.8 percent of total output (GDP) over the past three years, and budget deficits have averaged 5.0 percent of GDP. Public debt is equivalent to 54.5 percent of GDP.

Regulatory EfficiencyView Methodology

Despite some progress, the regulatory framework still lacks transparency and efficiency. Completion of licensing requirements remains burdensome. The rigid labor market has been stagnant, failing to generate dynamic job growth. In 2016, social tensions triggered populist spending policies to placate a frustrated electorate, but low oil prices should permit the government to achieve its goal of phasing out fuel subsidies.

Open MarketsView Methodology

Trade is extremely important to Tunisia’s economy; the value of exports and imports taken together equals 102 percent of GDP. The average applied tariff rate is 13.1 percent. Foreign investors may not own agricultural land, and investment in other sectors may be subject to government screening. State-owned enterprises distort the economy. The weak financial sector is fragmented. Access to credit is limited, and capital markets are underdeveloped.

Country's Score Over Time

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Regional Ranking

rank country overall change
1United Arab Emirates76.94.3
2Qatar73.12.4
3Israel69.7-1.0
4Bahrain68.5-5.8
5Jordan66.7-1.6
6Kuwait65.12.4
7Saudi Arabia64.42.3
8Oman62.1-5.0
9Morocco61.50.2
10Tunisia55.7-1.9
11Lebanon53.3-6.2
12Egypt52.6-3.4
13Iran50.57.0
14Algeria46.5-3.6


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