Tunisia expects the coronavirus crisis to drive its budget deficit to 14% of gross domestic product in 2020, double the original target and the highest in nearly four decades, a government official told Reuters on Friday.
The country aims to reduce the shortfall to 7.3% in 2021, the official told Reuters.
Tunisia hopes that its economy will begin to recover from the effects of the crisis after a historic recession this year.
“Tunisia expects GDP growth of 4% next year compared to a record contraction of 7% expected this year according the draft budget for 2021,” the official said.
Tunisia’s tourism-dependent economy shrank 21.6% in the second quarter of 2020 from a year earlier, hit hard by travel bans imposed to stem the spread of the coronavirus.
Tunisia had expected to borrow 12 billion Tunisian dinars ($4.36 billion) in 2020, but its needs have increased significantly due to the crisis. The borrowing needed this year is not known yet, but other officials say it is likely to exceed 21 billion dinars.
Next year, the nation’s borrowing needs are estimated at about 19.5 billion dinar, including $6 billion in foreign loans, the government official said.
Tunisia plans to cut corporate taxes to 18% next year from 20% and 25% now to help companies through the crisis and boost investment, he added.