Spending cut on slow growth

13 December 2002

Severe drought and falling exports have led the government to trim its budget spending for 2002 to TD 11,186 million ($8,028 million) from initial projections of TD 11,533 million ($8,277 million). Expenditure was cut by TD 347 million ($249 million), the same amount as the budget revenue shortfall, in order to maintain the deficit for 2002 at around 2.6 per cent of gross domestic product (GDP). The government hopes to cut the deficit to about 2.2 per cent of GDP in the 2003 budget, which is presently being debated by parliament.

The decision to cut spending follows the government's move in November to revise down the GDP growth forecast for 2002 to 1.9 per cent, from an earlier forecast of 4.9 per cent. The 2002 drought, leading to the worst harvest for half a century, was again blamed for the reduction.

Heavy rains in late 2002 auger well for Tunisia's economy in 2003. The government expects agricultural output to expand by 12 per cent, compared to an 11 per cent projected decline in 2002, while exports are forecast to grow by 7.5 per cent after a projected 2.8 per cent decline in 2002. The strong recovery is expected to boost GDP by 5.5 per cent in 2003, setting the economy back on the path of growth.

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