Tunisia - Overview of economy

When Tunisia achieved its independence from France in 1956, a 1-party state was established by President Habib Bourguiba. During his 31-year tenure, economic policy focused on state ownership and high levels of protection from outside competition. At this time the economy was based primarily on agriculture, oil, and phosphates. Although this degree of government control led to inefficiency and waste, the economy remained stable due to revenue from the export of oil and phosphates during the 1960s and 1970s. The collapse of the price of oil in the 1980s meant that Tunisia could no longer rely on oil as its principal source of foreign exchange. Tunisia's agricultural and tourism sectors deteriorated simultaneously. Under advice from the International Monetary Fund (IMF), Tunisia promptly adopted a 3-pronged program of structural adjustment: to reduce the size of the public sector , to reduce tariff barriers, and to create a stable macroeconomic climate.

Following the adoption of the adjustment program in 1986, the Tunisian economy has shifted from being largely state-controlled to being based on market principles. The economy is now diverse, with a large services sector, a healthy tourism industry, and a growing manufacturing sector. Despite these improvements, the Tunisian government is still faced with a serious unemployment problem. In 2001, there were 480,000 unemployed Tunisians, or 15.4 percent of the workforce.

As the economy improved, the amount Tunisia received in Official Development Assistance more than halved, from US$559 million in 1990 to US$278 million in 1995. Since 1996, the European Union has been the main source of assistance, with France, Italy, and Germany as the main donors. Tunisia's external debt remains high, having risen from US$3.5 billion in 1980 to US$11.078 billion in 1998. Most of this debt is owed to private creditors, and the Tunisian government has issued international bonds (financial notes promising repayment of a given amount by a given date, plus interest).