Summary:

A government plan has reportedly surfaced outlining the tapering of bread subsidies that have kept prices artificially low for decades. The plan includes a reduction in the number of bakeries producing subsidized bread as well as gradual price increases. Given the current trend in inflation that has pushed up consumer goods prices in Tunisia, there is concern amongst Tunisians about the economic impact on the working class if such reforms are implemented.

Outlook:  

As news and rumors of economic reforms linked to the International Monetary Fund (IMF) loan deal continue to swirl, our team is closely monitoring the general public and labor union responses. Reforms of this nature are impacting basic assumptions of working-class Tunisian household budgets that have been unchanged for decades. Such disruptions raise the potential for social unrest and public discontent and raise the risks of unexpected public outcry in the form of demonstrations and protests in the short and medium term. However painful the political cost of such unpopular subsidy reforms, it’s unclear how the Tunisian government would continue to meet its financial obligations without instituting reforms.