The African Business Review May-Jun 2014 | Page 26

stability for this country and for the specified period does not
allow us to say that.

The democracy index assigned to Tunisia by the World
Bank[2] was (-0.37) in 2011, and (-0.19) in 2012. This score has
not evolved so much compared to 1996 when it was (-0.44).
Furthermore, the data shows that the level of political stability
has deteriorated. According to the same organisation, index of
political stability was (-0.39) in 2010 and (-0.72) in 2012. In
1996, this index was equal to (+0.19).

In addition, we can note the deterioration of the score rating
of Tunisia by the rating agencies. Sovereign rating decreased
from Baa2 in 2010 to Baa3 in 2012 according to Moody’s rating
agency, which corresponds to one notch deterioration in the
sovereign rating. This credit rating went from BBB in 2010 to
BB + in 2012 according to Fitch Ratings, which corresponds to
two notches deterioration. And it is from BBB in 2010 to BB in
2012 according to Standard & Poor’s, which also corresponds to
two notches deterioration in sovereign rating[3].

The evolution of the socio-political and economic events
that happened in Tunisia during the post-‘democratic’-transition
period recall the thesis of the median voter cited above and
critics that we could formulate against the policies established
by Tunisian economic decision-makers are similar to those we
have previously made.

To meet the demands of the median voters, governments
that preceded the revolution began to accumulate external loans
that was mostly affected into consumer spending (between 2010

and 2012, the total domestic consumption increased by 20.7%)
[4]
, grants and increases in payroll. These populist practices have
caused an increase in the level of public deficit, a deterioration
of the balance of payments, a sharp devaluation of the Tunisian
dinar and an increase in the level of inflation.

Although there has been an improvement in some objective
criteria, such as the increase of the number of political parties or
the improving of freedom of the press, the Tunisian government
has not either promoted an institutional environment that allows
the different socio-economic actors to really neither participate in
the formulation of economic policies nor allow them to contest
these policies. And this is what explains the lack of rebound in the
evolution of democracy scores. This lack of democratic rebound
takes away the confusion about the relationship between inflation
and democracy in Tunisia.

The presence of checks and balances, of more participation
and transparency would have avoided the Tunisian economy
populist practices and excessive indebtedness, which has not been
used for purposes of economic development, but was assigned
in grants and wage increases, and this, under the pressure of the
unions associations. This misallocation of resources has led to
the impoverishment of the state budget, the devaluation of the
Tunisian dinar relative to foreign currencies, especially the Euro
and the dollar, and therefore, an increase in inflation.

Experience shows that democracy and macroeconomic
stabilization policies are not incompatible. On the contrary,
the presence of a democratic environment is a prerequisite to

2

3
4

Scores of democratization and political stability are measured by the indices “Voice
and accountability” and “Political stability”, these scores were developed by Kaufmann
et al. (2012). These scores of governance range from -2.5 to 2.5, scores approaching
2.5 correspond to better results.

26 | The African Business Review

Sources: Moody’s investors services, Fitch Rating and Standard & Poor’s.
Source: Central Bank of Tunisia.