Tunisia achieves low overall compliance with international standards and codes, with a score of 30.83 out of 100 in our Standards Compliance Index. Tunisia's compliance in the area of macroeconomic fundamentals is slightly above average for the region. Tunisia continues to improve the quality and dissemination of its statistical data and increase the transparency of its monetary policy. However, in the market infrastructure category, the majority of standards have insufficient information with which to assess compliance, making a full assessment of its observance of international standards difficult. Tunisia has pledged to adopt and implement the Financial Action Task Force's money laundering recommendations. In the area of financial supervision, Tunisia has established the legal and regulatory framework for effective banking supervision and has made considerable progress in establishing a sound securities market supervisory framework. However, there is no information available on its adherence to the International Association of Insurance Supervisors' revised Insurance Core Principles.

Macroeconomic Policy and Data Transparency

Tunisia has been a subscriber to the Special Data Dissemination Standard (SDDS) of the International Monetary Fund (IMF) since 2001. The SDDS website discloses that Tunisia meets most coverage, periodicity, and timeliness specifications, and disseminates many of the requisite advance release calendars, which are regularly updated. Exceptions to this, however, include general government and public sector operations, interest rates, the share price index, the exchange rate, and the international investment position. Tunisia avails itself of timeliness and periodicity flexibility options for its employment and unemployment data, and takes a special timeliness flexibility option for its first-quarter national accounts data. It also posts summary methodologies for many of the required data categories, except for interest rate data. Public availability of information is one area where the IMF (in its 2006 Report on the Observance of Standards and Codes) finds that Tunisia has much room for improvement. Dissemination of data is hindered by the lack of an internet presence for the Tunisian central bank (its website is still under construction as of January 2008) and the incompletely developed website of the Ministry of Finance. The replacement of outmoded methodologies and categorization standards with systems currently recognized as international best practice would also be a big step forward for Tunisia. More »

In 2002, the IMF published its most recent full-scale assessment covering monetary policy transparency (it was updated in 2006), in which Tunisia's overall practices for monetary policy were judged to be transparent but nonetheless in need of certain improvements. Flaws identified in the report included a lack of clarity in the prioritization of policy objectives, insufficient autonomy of the Central Bank of Tunisia (BCT) due to the criteria by which bank board members were appointed or dismissed, the lack of an internal audit of the BCT's accounts, and the failure to make publicly available a periodic, performance-oriented assessment of monetary policy implementation. In a 2006 Update, the IMF found that the production of a performance-oriented assessment was partially implemented, whereas the problems of BCT policy prioritization, board appointment/dismissal criteria, and independent auditing were pending legislation. In 2006 the BCT law was amended to enhance the BCT's autonomy and independence. The 2007 IMF Article IV consultation reports that a provision of the amendment specifically defined the primary monetary policy objective as the maintenance of price stability. Tunisia has been a subscriber to the IMF's Special Data Dissemination Standard since 2001, and generally meets all requirements of coverage, periodicity, and timeliness. More »

Tunisian fiscal policy transparency has been the subject of a series of assessments and updates conducted by the IMF in 1999, 2001, and 2002 and was again discussed in the 2007 IMF Article IV Consultations report. These assessments found that Tunisia has made steady progress in achieving transparency in fiscal management, some of which has flowed from Tunisia's subscription to the IMF's SDDS in June 2001. A new tax code in 2002 provided greater clarity as to taxpayer and government rights and obligations. Tunisia's ongoing move toward greater fiscal consolidation and the privatization of state-owned enterprises has also helped to improve both transparency and sustainability. The SDDS website discloses that Tunisia meets most requirements of timeliness, coverage, and periodicity and produces summary methodologies for many of the requisite datasets. Fiscal data reported to the SDDS is also subject to advance release calendars, except for the category "general government and public sector operations." Nevertheless, the IMF maintains that Tunisia still has a way to go to meet all requirements of fiscal transparency. To move closer to that goal, the Tunisian authorities have begun work on establishing websites for the National Statistics Institute and the Ministry of Finance, but as of January 2008, neither site was up and running. More »

Institutional and market infrastructure

There is insufficient publicly available information that directly addresses Tunisia's compliance with the World Bank's Principles and Guidelines for Effective Insolvency and Creditor Rights Systems. However, a 2004 study by P. A. Casero and A. Varoudakis attempted to quantify Tunisia's insolvency regime according to a number of measures. The authors concluded that, in Tunisia, creditor's rights in bankruptcy are weak, business exit remains lengthy, and the courts reserve broad powers in insolvency proceedings. According to the authors, this situation does not help to preserve the value of the creditors' claims. The World Bank's 2008 ranking of Tunisia's "closing a business" performance on three salient indicators (time required, cost, and return to creditors) suggests that the situation remains largely similar today: in Tunisia, it takes an average of 1.3 years to complete proceedings, costs an average of 7% of the total estate, and the average return to creditors is 51.5 cents on the dollar. More »

Companies in Tunisia adhere to national accounting standards called the Tunisian Accounting Standards (TASs). The World Bank, in a 2004 assessment of accounting and auditing practices in Tunisia, observed that Tunisia's Law on the Enterprise Accounting System in 1997 changed TASs dramatically, achieving greater harmonization with International Financial Reporting Standards (IFRSs). However, significant differences still exist, because some of TASs are based on an earlier version of IFRSs. Moreover, the World Bank pointed out that financial institutions and insurance companies demonstrated low compliance with TASs. It therefore recommended adopting IFRSs for all public interest entities while maintaining the use of TASs by Small and Medium-size Enterprises. The World Bank also recommended that Tunisia strengthen its legal framework and financial transparency requirements, as well as upgrade its academic and professional education and training in the field of accountancy. More »

There is insufficient information publicly available directly addressing Tunisia's compliance with the Organization for Economic Cooperation and Development's Principles of Corporate Governance. According to a 2002 Financial System Stability Assessment (FSSA) on Securities Regulation by the IMF, legislation in Tunisia regarding the provision of public information on listed companies and the protection of shareholders' rights was perceived as "sound and clear." In a 2007 article on Tunisia's corporate governance regime, Hamouda found that the 2000 Commercial Code constitutes the main reference regarding corporate governance. In its 2006 FSSA Update, the IMF stated that the banking law was revised in 2006 and governance of banks is improving. Nevertheless, the Center for International Private Enterprise reported in 2005 that there is a clear gap between Tunisia's corporate governance legislation its implementation. In 2007, the African Development Bank reported that the Tunis Stock Exchange was established in 1969, privatized in 1994, and is regulated and supervised by the Financial Markets Council. More »

According to the 2004 World Bank assessment (updated in 2006), Tunisia has two professional accountancy bodies that are authorized to conduct statutory audits. Originally, the Institute of Chartered Accountants (Ordre des Experts Comptables de Tunisie, or OECT) had the exclusive right to conduct audits, but this right was later extended to another professional body, the Society of Accountants. The OECT adopted International Standards on Auditing (ISAs) in 1999, effective for periods beginning in 2000. Prior to the adoption of ISAs, the OECT issued auditing standards which, according to the World Bank, were "seriously deficient." This prompted Tunisia to switch to international standards. The Society of Accountants, on the other hand, has never adopted ISAs. This has raised concerns about the quality of audits performed by this organization. The World Bank recommended all statutory audits be conducted in accordance with ISAs. It also pointed out discrepancies in the legal and regulatory framework, stressed the necessity to resolve these discrepancies, and recommended upgrading academic and professional education and training. More »

Tunisia is a founding member of the Middle East and North Africa Financial Action Task Force (MENAFATF), which is an associate member of the Financial Action Task Force (FATF). Members of the MENAFATF signed a memorandum of understanding in 2004 whereby they pledged to adopt and implement the FATF's recommendations. Moreover in its 2006 annual report, the MENAFATF states that all accession countries must adopt the FATF Forty Plus Nine Recommendations and Special Recommendations. However, apart from these statements from the MENAFATF, there is little information addressing Tunisia's actual compliance with the FATF's recommendations. According to the World Bank's 2006 Financial Sector Assessment (FSA), although the anti-money laundering (AML) and combating the financing of terrorism (CFT) regime is generally in line with international standards, weaknesses remain in the legal framework with regard to the freezing of funds, international cooperation, the identification of beneficial owners, the coverage of designated non-financial businesses and professions, and suspicious transaction reporting. As noted in a 2005 U.S. Department of State International Narcotics Control Strategy Report, a comprehensive AML/CFT law was adopted in December 2003, and was expected to significantly improve Tunisia's AML/CFT framework. Tunisia also established a financial intelligence unit (FIU) within the Central Bank of Tunisia, as stated in the World Bank's 2006 FSA. However, only a few suspicious transaction reports have been filed with the FIU in recent years, and the implementation of the AML/CFT law is still in its initial phase. More »

According to the IMF's 2002 Report on the Observance of Standards and Codes (ROSC) on Payment Systems in Tunisia, the national check clearing and settlement system was the country's systemically important payment system, handling more than 90 percent of payments in terms of value. The system, however, was not compliant with Core Principles for Systematically Important Payment Systems (CPSIPS) IV and V, developed by the Committee on Payment and Settlement Systems. The ROSC, however, confirmed that the Tunisian authorities were developing a real-time gross settlement (RTGS) system. The Tunisian Central Bank's 2006 annual report stated that the new electronic payment system in Tunisia, called the Gross Amount System of Tunisia (SGMT), came into operation in November 2006. The 2006 IMF FSSA Update asserted that the (then) forthcoming RTGS system would meet international best practice requirements, including settlement finality, fully collateralized intraday central bank advances, and optimization procedures for queues. The same report also observed that same day clearing and settlement in the national check clearing system and a reduction in delays in check processing had not yet been achieved. However, since the implementation of the SGMT, there is insufficient information publicly available as to Tunisia's compliance with the CPSIPS or whether the national check clearing system still remains systemically important. More »

Financial Regulation and Supervision

Tunisia underwent the IMF's Financial Sector Assessment Program (FSAP) in 2001, the results of which were published in the IMF's 2002 FSSA. The report, although not entirely critical of Tunisia's financial sector supervision, did find Tunisia noncompliant with several of the Banking Core Principles (BCPs) for Effective Banking Supervision. Subsequently, in 2007, the IMF released a report on the findings of its FSAP Update on Tunisia conducted in the same year. This report concludes that Tunisia is compliant or largely compliant with 21 of the 30 BCPs (observing that BCP 1 is divided into 6 sub-principles). The IMF's 2007 report also observed that the legal and regulatory framework in Tunisia is largely consistent with international rules. In conducting its 2007 assessment, the IMF took into account Tunisia's 2006 amendments to the 2001 Law Relating to Loan Establishments and the 1958 Law on the Creation and Organization of the BCT. The 2007 FSAP Update also considered the 2006 BCT's Circular on Internal Controls, which was expected to be implemented in early 2008. The IMF's 2007 report added that improvements implemented by the Tunisian authorities include the regulation of licensing, tighter investment criteria, better information sharing, and the introduction of consolidated supervision. However, the report recognized that weaknesses remain regarding credit and provisioning policy, consolidated supervision, remedial measures, and supervision of foreign banks. More »

According to the IMF's 2002 FSSA, securities markets in Tunisia have experienced significant growth but still play a very small role in the financial system compared to the banking sector, and consequently do not pose systemic risks. The legal framework governing the financial markets has been modernized and its objectives follow the International Organization of Securities Commission's (IOSCO) principles. However, there is poor enforcement of laws and regulations, which the assessment team fears may diminish public confidence in the market's transparency and integrity. The IMF report also points out that most companies are deterred from listing by the high cost of transparency and the desire to maintain full control of the company. A 2006 IMF FSSA Update indicates that Tunisia has since implemented structural reforms in order to improve the transparency and accountability of the financial system, strengthen the regulatory framework, and encourage more market intermediaries. However, although many of the recommendations of the 2002 IMF FSSA have been implemented or partially implemented, there has not been much growth in the stock market or the number of listings. The IMF's 2007 Article IV Consultation with Tunisia reports that the government has adopted a strategy to strengthen the legal framework based on the recommendations of the 2002 FSAP and its 2006 Update. More »

In its 2002 FSSA, in which insurance supervisory practices in Tunisia were benchmarked against Insurance Core Principles (ICPs) using the methodology developed by the International Association of Insurance Supervisors (IAIS) in 2000, the IMF concluded that supervision of insurance companies in Tunisia was inadequate and that supervisory resources were insufficient. Weaknesses were identified in the area of capital adequacy and solvency, corporate governance, reinsurance, internal controls, and prudential rules. Following the IMF's 2002 assessment, Tunisian authorities adopted prudential norms regarding solvency and minimum capital requirements in line with international best practices, as noted in the IMF's 2006 FSSA Update. According to the World Bank's 2006 Financial Sector Assessment (FSA), the legal and prudential framework in Tunisia was also strengthened through amendments to the Insurance Code in 2002. Furthermore, the General Directorate of Insurance was replaced by the General Committee on Insurance (CGA) as Tunisia's insurance supervisory authority. While the CGA has increased its staff and sanctioning powers and improved the frequency of its on-site inspections, the World Bank found that it was still lacking. However, there is insufficient information publicly available regarding Tunisia's compliance with the new, more stringent ICPs. More »

Legend:

Credit Ratings

Moody's Baa2/Stable

Fitch BBB/Stable

Standard & Poor's A/Stable

Macroeconomic Data

2007 GDP (Current Prices): 35 billion USD (IMF)

2007 GDP (Per Capita): 3,398 USD (IMF)

2008 GDP (Growth Forecast): 5.5% (IMF)

2008 Inflation (CPI): 4.7% (IMF)

2007 Unemployment: 13.9% (CIA)

2006 Foreign Direct Investment

FDI (Inward): 3.3 billion USD (UNCTAD)

FDI (Outward): 0.03 billion USD (UNCTAD)

2006 Official Development Assistance

ODA (Received): 432 million USD (OECD)

ODA (Disbursed): N/A million USD (OECD)