October 18, 2011 / 11:19 AM / 6 years ago

Tunisia finmin says next govt needs to revive privatisation

Tunisia's Finance Minister Jalloul Ayed speaks during a news conference at the government palace in Tunis April 1, 2011.Zoubeir Souissi

LONDON (Reuters) - Tunisia's next government needs to quickly revive the country's privatisation programme to help get the economy back on track, while tourism should benefit now that the situation in neighbouring Libya is more stable, its interim finance minister said on Tuesday.

A privatisation programme, which began under the rule of President Zine al-Abidine Ben Ali, has been put on hold following the leader's ouster in January, but Finance Minister Jalloul Ayed said the programme should continue after a new government is elected on October 23.

"The government should and will privatise those entities that normally can be handled by the private sector effectively," Ayed said in a pre-recorded interview at a conference, speaking via video link from Tunis.

"How we go about reactivating the privatisation programme needs to be determined and formulated by the new government, it is something we would very much encourage them to do."

Tourism across North Africa has been hit by the Arab spring protests this year but Ayed said tourism in Tunisia, which fell 40 percent in revenue terms year-on-year in the nine months to end-September as the number of tourists dropped by 35 percent, should start to pick up.

"The economy was hit after the turmoil following the revolution in January. Tourism -- which has an important impact on the economy -- was badly hit," Ayed said.

"Hopefully things are looking brighter now that things in Libya are stabilising."

Tourism previously accounted for 6.5 percent of gross domestic product and employed one in five Tunisians.

Ayed reiterated recent comments that GDP growth in Tunisia was unlikely to exceed 1 percent this year, and could be zero.

Elections on October 23 will be the country's first following the ousting of Ben Ali and its first genuinely democratic election.

But the vote has also fuelled tension between Islamists who are free for the first time to express their faith and secularists who believe their modern, liberal values are under threat.

Tunisian stocks plunged in the aftermath of the unrest and although now back at February levels, remain nearly 20 percent below record peaks hit last year.

Group of Eight finance chiefs last month pledged $38 billion

in financing to Tunisia, Egypt, Morocco and Jordan over 2011-13, widening a deal agreed in May and offering Libya the chance to participate too.

There was no breakdown by country, Ayed said, adding this was something left to the countries to negotiate for themselves.

"We don't expect any disbursement any time soon, the most important thing is the commitment is there," he said.

"It means we would not necessarily need to go to the market to raise funds."

Tunisia cancelled Eurobond plans after the uprising. The country holds a coveted investment grade rating but has a negative outlook from all three major ratings agencies.

The European Union has allocated a total of 4 billion euros in loans and grants to Tunisia for the period 2011-2013 to help economic recovery, the official TAP news agency quoted the EU ambassador as saying last week.

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