Tunisia: Expats prop up ailing economy as remittances surpass state revenues

Remittances from over 1.5 million Tunisian expatriates employed abroad have rescued the country's ailing economy this year, as a new generation enters the overseas workforce. The result is that the inflow of finance generated by remittances has exceeded the state's revenue from tourism and other sectors, and has become the main source of foreign currency, saving the country from bankruptcy.

Expatriate workers' remittances have been taking an upward trend for years. As a younger generation becomes "economically productive", they are choosing to send a portion of their wages to banks in Tunisia.

New data from the Central Bank of Tunisia revealed that between January and July of this year, nearly 4.9 billion dinars (around $US 1.5 billion) were transferred to Tunisian banks in remittances, compared to 4.2 billion dinars during the same period of 2021, an increase of 15 percent.

"Remittances from over 1.5 million Tunisian expatriates employed abroad have rescued the country's ailing economy this year, as a new generation enters the overseas workforce"

The statistics showed that revenue from the tourism sector was 1.9 billion dinars ($US 615 million) during the last seven months, an increase of nearly 65 percent compared with the same period last year. Data from the Central Bank of Tunisia showed that remittances had surpassed revenue from tourism by over 151 percent, making it the number one source of hard currency in Tunisia. This is as the phosphates industry and industrial export sectors continue to falter.

Surpassing tourism revenues

Economist Mohamed Moncef Sherif puts the remittances rise down to a few factors, the most important being the entry of a new generation of Tunisians abroad into the workforce. He points out that these are the generation who left the country to study abroad during the last decade.

He said to Al-Araby Al-Jadeed, The New Arab's Arabic-language sister edition, that the composition of expatriates has changed – the Tunisians who have emigrated in recent years are now mostly highly educated, many with degrees in engineering, medicine and finance. Their qualifications allow them to find highly-paid and stable jobs in European countries and the Gulf.

Others have trained to work in manual professions – as builders, drivers and plumbers – and there are also those who have trained as medical assistants, a profession that has become highly in demand in the wake of the coronavirus pandemic, with Germany and the Scandinavian countries among those most desperate for medical assistants.

He emphasised that via their remittances, Tunisian expatriates are helping to prevent the devaluation of the Tunisian dinar, which is under huge pressure due to the decline in foreign currency income at the same time as state expenditure is rising due to increased costs of food and energy imports and foreign debt payments.

"Tunisians who have emigrated in recent years are now mostly highly educated, many with degrees in engineering, medicine and finance. Their qualifications allow them to find highly-paid and stable jobs in European countries and the Gulf"

Sherif said that Tunisians abroad were content to transfer the money to their families for general spending, real estate purchases, or saving. By contrast, they had not really contributed much in terms of investment, which was due to a lack of incentives and bureaucratic hurdles they face in launching projects or entering investment partnerships with foreigners or Tunisian businessmen.

He stressed that the role of expatriates needed to be given a higher status when it came to structuring Tunisia’s economy and said they should be encouraged and supported to launch investment projects so that Tunisia could benefit from the wealth of experience they had gained abroad.

Encouraging a transfer of experience and technological expertise could lead to an increase in general growth rates and job creation within Tunisia, he says. Since the start of the year, the Tunisian dinar has declined against the dollar by nearly 14 percent, but has remained practically stable next to the Euro.

300,000 new expats over the last decade

An estimated 300,000 Tunisians have moved overseas to work over the last decade. For some families, the bank transfers they receive from their sons and daughters working abroad have become their primary source of income.

According to a study carried out under the supervision of the Office of Tunisians Abroad (L'Office des Tunisiens à l'Etranger (OTE) - a governmental body that supervises Tunisian communities abroad), the number of highly qualified Tunisians in Europe exceeds 90,000.

In May, the World Bank anticipated that officially recorded remittance flows to low and middle-income countries would increase by 4.2 percent this year to reach US$630 billion, following a record recovery of 8.6 percent in 2021. According to a report by the International Finance Corporation (IFC), remittances have long been the largest source of external resource flows into developing countries in the region, accounting for 61 percent of total inflows in 2021.

"This source of finance, derived from the earnings of more than one and a half million citizens in the diaspora, has helped service Tunisia's debts since the beginning of the year, at a time Tunisia's financial troubles continue due to the delay in the IMF deal"

The main source of foreign currency

According to official data, the remittances of Tunisians abroad increased by approximately 15.3 percent between 2016-2020. However, in 2021, expatriate remittances rose further, setting a record of 7.5 billion dinars, making them the main source of foreign currency in Tunisia. They played a vital role in ensuring that the country was able to keep importing raw materials which were used to repay over US$ 3 billion of foreign loans.

While some other countries in the region see higher remittance inflows, like Egypt – where remittances in 2021 amounted to around US$ 33 billion and Morocco (US$ 9.3 billion) – economic expert Khaled Al-Nouri, told Al-Araby Al-Jadeed that the remittances of Tunisians abroad rank first among sources of foreign currency, in addition to the foreign loans obtained by the country.

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He said that this source of finance, derived from the earnings of more than one and a half million citizens in the diaspora, has helped service Tunisia's debts since the beginning of the year, at a time Tunisia's financial troubles continue due to the delay in the IMF deal.

In a related context, he pointed out that the approval of the new foreign exchange law, which will allow individuals to open bank accounts in foreign currencies, will increase the value of remittances in the future, deeming it likely that the upward trend will continue in the coming years.  

This is an edited translation from our Arabic edition. To read the original article click here.

Translated by Rose Chacko   

This article is taken from our Arabic sister publication, Al-Araby Al Jadeed and mirrors the source's original editorial guidelines and reporting policies. Any requests for correction or comment will be forwarded to the original authors and editors.

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