The standoff between Tunisia’s President Kais Saied and the International Monetary Fund came to a head this month, just days after he sacked his finance minister, Sihem Boughdiri Nemsia. The IMF has now closed its office in Tunisia, and its representative, Marc Gérard, has left after Nemsia—who negotiated an IMF bailout—was dismissed on 5 February after more than three years at the helm.
During her tenure, she wielded significant influence over the livelihoods and finances of Tunisians and led negotiations with the Fund, which, in 2022, resulted in a $1.9bn loan offer. Saied refused it in 2023 because it was conditional on subsidy cuts and slimming the vast public sector payroll, which he is against.
Seeking a rescue
A bailout is needed. At the end of 2024, public debt was close to 80% of the country’s gross domestic product (GDP), with 7% of that owed externally. In 2019, when Saied took office, it was at 67%. This year, Tunisia needs to borrow an estimated 14% of its GDP to avoid a default, but its bonds are rated as junk, and there are fears about the solvency of Tunisian banks.
Nemsia became the architect of what was branded as self-reliance policies, which the state pursued after Saied turned down the IMF. She also crafted four budgets which introduced austerity measures that manifested in higher taxes and reduced government spending on subsidies.
This led to social unrest, alongside soaring prices, anaemic growth of 0.4% in 2023, shortages of basic foodstuffs like milk, flour, and sugar, and a scarcity of gas cylinders, which are often used for cooking.
Food inflation reached 9%, and general unemployment among Tunisia’s 12 million population hit 16%, but for young people, joblessness is much higher—around 40%. State utility companies are owed around $1.5bn, most from residential customers who cannot afford to pay the high prices for water and electricity.
Initially, Saied backed Nemsia’s financial policies, as they demonstrated Tunisia’s financial resilience without needing help from the IMF and the World Bank, but Western capitals remained concerned about a collapse of Tunisia’s public finances and a social explosion that could ripple beyond its own borders.
Legitimising criminality
Nemsia’s dismissal comes just weeks after the approval of the most recent budget and after Saied appeared visibly angry while asking her about the commission managing confiscated assets since 2011, including those of former President Zine El Abidine Ben Ali and his in-laws.
Nemsia had worked at the Ministry of Finance for 35 years, giving her extensive experience and knowledge of its operations, but was suspended in March 2021 (when she was director-general of tax legislation) along with two other senior ministry directors.
Their removal let the ministry pass a law allowing for the settlement of exchange violations with companies and individuals and for an amnesty for tax violations—a law strongly opposed by Tunisia’s central bank. This law was described as allowing the laundering of money and the protection of smugglers.
The opposition argued that the trio's suspension and the law's approval paved a dangerous path towards legislative manipulation by tax evaders and smuggling barons, whose political influence had grown to such an extent that they could tailor laws that legitimised their crimes.
A World Bank report from 2015 titled Tax Evasion by the Influential Costs Tunisia $1.2bn highlights the losses incurred before and after the fall of Ben Ali's regime in 2011. Another report from the Brussels-based International Crisis Group from 2017 cited "300 shadow figures", including businessmen and smugglers, controlling national decision-making and blocking reforms.
Through the funding of political parties and their election campaigns, this influence extended to controlling the appointment and dismissal of ministers and senior officials in critical state positions, from public administration to security and customs.
