Tunisia: State budget deficit narrows to 6.0% of GDP in 2024
Metodi Tzanov
Helping finance professionals understand what is going on in Emerging and Frontier Markets
The state budget deficit declined to TND 10,048mn in 2024 from TND 11,409mn in the preceding year, according to the full-year budget execution report which was published by the finance ministry on Monday (Feb 24). The budget deficit narrowed substantially to only 6.0% of GDP from 7.6% of GDP in 2023 and undershot the target of 6.6% set in the 2024 Finance Act. The government managed to reduce the fiscal gap thanks to considerable savings on the spending side, although revenues underperformed expectations.
The government managed to increase revenues by 8.7% in 2024 mostly due to an economic recovery which boosted corporate income tax collections by 16.6% and personal income tax collections by 8.8%. In the corporate sector, oil companies increased their contribution to the state budget by 31% which is significant against the drop of more than 31% recorded in 2023. Indirect tax collections also increased across the board, led by a 7.6% increase in VAT collections, as well as 12.6% in the income from other indirect tax charges. Despite the improvement on the tax revenue side, gross tax revenue still undershot the budget plan by 5.2%.
The underperformance on the revenue was more than offset by the lower spending relative to the budget plan in 2024. The government saved more than TND 1,400mn from its wage bill and spent TND 692mn less than it planned on subsidies. The spending on wage growth increased by 2.6% against a plan for a rise of 4.1%. Meanwhile, the government plans to increase the spending on public sector wages by 9.5% in 2025. With respect to subsides and transfers, the spending on subsidies was broadly in line with the plan (TND 11,347mn against a plan for TND 11,337mn) and the underspending occurred in the amount of transfers. Nearly 73% of the budget in 2024 was spent on wages, transfers and subsidies.
The government also spent TND 24,800mn on domestic and foreign debt servicing, including TND 18,522mn in repayment and TND 6,284mn in interest. The total stock of government debt was reported at TND 135,032mn at the end of December, comprising 81.2% of GDP.
The government borrowed extensively on the domestic market last year (TND 23,203mn) and foreign borrowing was worth only TND 3,497mn in gross terms. The government was able to attract only TND 387.5mn for budget purposes from external sources last year. However, this year, this borrowing is planned at TND 3,886mn which includes substantial amounts from bilateral cooperation (TND 1,886mn) and Afreximbank (TND 1,565mn). As it can be recalled, the government plans a reduction in the budget deficit to 5.5% of GDP this year, reflecting unchanged spending and a 1.8% increase in revenue in nominal terms.