Jalloul Ayed, a former Citibank banker who has been finance minister since January, says the first vehicle will fund public sector infrastructure projects that are central to attracting job-generating projects to Tunisia’s regions.
“Without infrastructure, you’re not going to have real economic development and access to remote regions of the country,” he says. Complementing this, a “generational fund”, with sectorial sub-funds, will enable multilateral investors and government agencies to take equity stakes in ventures of various sizes.
The idea is that the investors can then exit a few years later, ideally after the growing companies have listed on the Tunis bourse, Mr Ayed says.
Since a nationwide revolt ousted Zein al-Abidine Ben Ali on January 14, generating jobs for Tunisia’s relatively highly educated young people has been at the top of the agenda for the interim government.
Meeting In France last month, members of the G8 said multilateral institutions would free $20bn to support economic reforms efforts in Egypt and Tunisia until 2013.
Nicolas Sarkozy, the French president, said the rest of a $40bn package of support for the “Arab spring” would consist of $10bn of bilateral support from G8 governments and $10bn from Gulf Arab governments.
Another G8 meeting is due in Brussels on July 12, which may produce harder commitments and a split of the funding between Tunisia and Egypt, which are currently identitifed as the main beneficiaries. In the meantime, Mr Ayed is liaising with World Bank advisers.
“From the G8 it was a very strong declaration of support” and the next step is for the International Monetary Fund to validate the broad macroeconomic framework proposed by Tunisia, he says. The country’s existing debt burden of $21bn is judged to be not excessive by analysts.
In the wake of the ousting of Mr Ben Ali, Moody’s downgraded Tunisia’s sovereign debt to Baa3 – still investment grade – while S&P has the foreign currency debt at BBB-. But the Tunis stock market is still down by a fifth in the year to date.
The infrastructure investment fund, modelled on Morocco’s Caisse de Depot et de Gestion, is designed not to weigh heavily on the government’s budget and to allow multilateral institutions and government agencies to monitor easily how resources are being deployed, Mr Ayed says.
The Moroccan fund is in turn modelled on a French institution established in 1816 to restore order to public finances after Napoleonic rule; while parallels with Tunisia after Mr Ben Ali’s authoritarian regime are not something Mr Ayed dwells on, the list of individuals associated with the old regime whose assets are subject to confiscation by the government was last week expanded to 155.
Bank lending to Mr Ben Ali, his extended family and associates totalled about TD2.5bn ($1.82bn), Mr Ayed says. “But they are not bad loans necessarily because a lot of those companies continue to work normally” under government supervision,” he says.
“These people set up businesses in some very good and productive sectors of the economy. They were everywhere. And most of the lending was in fact supported by strong guarantees, whether land, shares, real estate and so on.”
Mr Ayed is to be chairman of a commission supervising confiscated assets as the process of determining claims proceeds, always under the fierce glare of public opinion.
Last week, Tunisia’s interim cabinet in effect had its mandate extended after the country’s first election since the revolution was rescheduled from July to October 23. Some parties are now suggesting that this cabinet might continue beyond October as the elected constituent assembly debates a constitution.
If so, Mr Ayed will jealously guard his apolitical status. Having worked outside Tunisia since 1988, “I’m really not politically connected”, he says. “I’m too busy doing what I have to do. Serving a party, or parties, would be a different ball game.”
His focus is rather on areas such as banking sector reform “because sooner or later the size of investments will increase in this country, and we need to have strong banks. We have too many small banks.”
He also wants to boost public sector wages, which he believes are too low. In what he admits is a short-term “palliative” measure, a monthly payment equivalent to $145 has been introduced for graduate job seekers, subject to various conditions. It will soon be extended, at a lower rate, to certain non-graduate job seekers.
In the longer term, his hope is that other Tunisians will follow his example of returning from abroad, not least to contribute some of the financial expertise needed for the management of the two proposed funds.
Source: Eileen Byrne, FT.com, Monday 13th June 2011
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