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Tunisia’s Tourism Returns Drop by 64%

Concerns were voiced over the reopening of Tunisia’s borders to tourists. (Reuters)
Concerns were voiced over the reopening of Tunisia’s borders to tourists. (Reuters)
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Tunisia’s Tourism Returns Drop by 64%

Concerns were voiced over the reopening of Tunisia’s borders to tourists. (Reuters)
Concerns were voiced over the reopening of Tunisia’s borders to tourists. (Reuters)

Tunisia’s tourism returns have dropped by 64 percent to 1.9 billion dinars ($691 million) from early 2020 until December 10, compared to the same period in 2019.

According to the Tourism Ministry, returns had amounted to 5.3 billion dinars (about $1.9 billion) in 2019, according to the latest data published by the Central Bank of Tunisia (BCT).

This drop is mainly due to the decrease in the number of European tourists (especially French and German) during the summer season, greatly affecting the entire system associated with the tourism sector, including traditional industries, travel agencies, and car rental companies.

On June 27, Tunisia reopened its border and scheduled the full return of the tourism activity starting July. However, the rapid coronavirus outbreak in neighboring European countries and the start of a second wave of infections prevented any positive outcomes.

In this context, Tourism Minister Habib Ammar said tourism activities and traditional industries are in a state of complete paralysis after the rise in the number of COVID-19 infections.

Data from his ministry showed that the number of tourists arriving so far in Tunisia has fallen by 78 percent compared to the same period in 2019 and tourism revenues dropped by 64 percent.

In order to address this exceptional situation, the government approved a set of incentive measures aimed at preserving the institutions operating in tourism and traditional industries.

The government also decided to exempt travel agencies from contributing to the Development Fund for Competitiveness in Tourism.

It further approved to enable unemployed workers and tourist guides from a monthly grant of 200 Tunisian dinars (about $72.7).

The tourism ministry prepared a program to stimulate domestic tourism until late March 2021 to compensate for the severe shortfall in European tourism markets, in particular, and in tourists from the Maghreb region, especially Algeria and Libya.

Domestic tourism does not represent more than 10 percent of all tourism activities, yet the ministry is working to raise this rate to about 25 percent, saving a significant number of Tunisian tourist hotels from closing.

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FILE PHOTO: European Central Bank President Christine Lagarde and Governor of the Bank of Finland Olli Rehn arrive at the non-monetary policy meeting of the ECB's Governing Council in Inari, Finnish Lapland, Finland February 22, 2023. Lehtikuva/Tarmo Lehtosalo via REUTERS//File Photo
FILE PHOTO: European Central Bank President Christine Lagarde and Governor of the Bank of Finland Olli Rehn arrive at the non-monetary policy meeting of the ECB's Governing Council in Inari, Finnish Lapland, Finland February 22, 2023. Lehtikuva/Tarmo Lehtosalo via REUTERS//File Photo
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ECB's Lagarde Renews Integration Call as Trade War Looms

FILE PHOTO: European Central Bank President Christine Lagarde and Governor of the Bank of Finland Olli Rehn arrive at the non-monetary policy meeting of the ECB's Governing Council in Inari, Finnish Lapland, Finland February 22, 2023. Lehtikuva/Tarmo Lehtosalo via REUTERS//File Photo
FILE PHOTO: European Central Bank President Christine Lagarde and Governor of the Bank of Finland Olli Rehn arrive at the non-monetary policy meeting of the ECB's Governing Council in Inari, Finnish Lapland, Finland February 22, 2023. Lehtikuva/Tarmo Lehtosalo via REUTERS//File Photo

European Central Bank President Christine Lagarde renewed her call for economic integration across Europe on Friday, arguing that intensifying global trade tensions and a growing technology gap with the United States create fresh urgency for action.
US President-elect Donald Trump has promised to impose tariffs on most if not all imports and said Europe would pay a heavy price for having run a large trade surplus with the US for decades.
"The geopolitical environment has also become less favorable, with growing threats to free trade from all corners of the world," Lagarde said in a speech, without directly referring to Trump.
"The urgency to integrate our capital markets has risen."
While Europe has made some progress, EU members tend to water down most proposals to protect vested national interests to the detriment of the bloc as a whole, Reuters quoted Lagarde as saying.
But this is taking hundreds of billions if not trillions of euros out of the economy as households are holding 11.5 trillion euros in cash and deposits, and much of this is not making its way to the firms that need the funding.
"If EU households were to align their deposit-to-financial assets ratio with that of US households, a stock of up to 8 trillion euros could be redirected into long-term, market-based investments – or a flow of around 350 billion euros annually," Lagarde said.
When the cash actually enters the capital market, it often stays within national borders or leaves for the US in hope of better returns, Lagarde added.
Europe therefore needs to reduce the cost of investing in capital markets and must make the regulatory regime easier for cash to flow to places where it is needed the most.
A solution might be to create an EU-wide regulatory regime on top of the 27 national rules and certain issuers could then opt into this framework.
"To bypass the cumbersome process of regulatory harmonization, we could envisage a 28th regime for issuers of securities," Lagarde said. "They would benefit from a unified corporate and securities law, facilitating cross-border placement, holding and settlement."
Still, that would not solve the problem that few innovative companies set up shop in Europe, partly due to the lack of funding. So Europe must make it easier for investment to flow into venture capital and for banks to fund startups, she said.