Budget Support Tunisia, Covid emergency response and economic stabilisation
The Covid-19 pandemic has a devastating effect on Tunisia's economy and on the government's financial position. To support Covid-responses and economic recovery at the local level, SECO provides an emergency budget support grant of CHF 8.5 million to Tunisian municipalities.
Already before the Covid-19 outbreak, Tunisia showed elevated macroeconomic imbalances as evidenced by low GDP growth and a high unemployment rate. The Covid-crisis aggravates these imbalances, leading to a projected GDP contraction of 4.3 percent and a budget deficit of the same percentage for 2020. For the government of Tunisia, Covid response measures lead to an increase in expenditures, while revenues are projected to be USD 1.8 billion lower than projected for 2020. This also concerns Tunisian municipalities, which miss liquidity to maintain basic service delivery and invest in public works which are vital for local economies.
The overall goal of this budget support operation is to swiftly provide liquidity to Tunisian municipalities to i) finance key service delivery and exceptional Covid-related expenditures and ii) relaunch municipal investments to stabilise local economies.
To allow for a swift transfer of funds and strong fiduciary standards at the same time, SECO will channel this support through a well-established "Program for Results", implemented by the World Bank since 2015. This program is the international community's most important initiative to support decentralisation and municipalities in Tunisia. This SECO financing will thus also contribute to the program's objective of strengthening the capacity and financial independence of municipalities. Moreover, it promotes the development and maintenance of vital local infrastructure.
The main outcome of this emergency support is to combat the spread of the SARS-CoV-2 virus in Tunisia and to lessen the social and economic fallout caused by the pandemic. In the short term, municipal spending on public hygiene and communications will reduce the spread of the virus, and support to vulnerable members of municipalities will reduce the negative social impact. In the medium-term, the financing of local investment projects will serve as a strong countercyclical stimulus to revitalise local economies and create jobs.
Since this budget support is channeled though the larger World Bank Program for Results, it will also support the outcomes of this program, namely: to strengthen municipalities' performance- advance Tunisia's decentralisation reform- strengthen public institutions and systems relevant for decentralisation- improved transparency, participation and accountability at the national and local level, and- improve human resources management at all levels.
THE EMERGENCY SUPPORT OPERATION AIMS AT THE FOLLOWING OUTPUTS:
Maximise the percentage of municipalities that ensured municipal services continuity during and aftermath the crisis.
At least 55 municipalities will have received an operating grant under the program.
At least 146 municipalities received trainings and/or technical assistance in areas related to local economic development and post-crisis recovery.
THE BROADER PROGRAM DELIVERS THE FOLLOWING OUTPUTS:
Timely publication of indicative unconditional capital grant allocation for each municipality.
90% of the 272 municipalities covered under the program achieve the minimum conditions deemed necessary for the functioning of a municipality.
70% of municipalities covered under the program achieve a performance level deemed satisfactory.
80% of municipalities covered under the program have executed their annual investment plans on schedule.
Information on the performance and financial position of municipalities is published annually.
Results from previous phases:
Introduction of a performance-management system for municipalities. 97% of LGs now achieve the 5 minimum conditions under the performance management system.
97% of municipalities adopted an annual investment plan according to the participatory process in 2019.
In 2019, 363,472 citizens accessed improved municipal infrastructure in disadvantaged neighbourhoods, with more than 230 km of roads constructed or rehabilitated, and more than 2,000 streetlights put into service.
80% of municipal audit reports were published in 2018, and it is expected that the Supreme Audit institution will achieve 100% coverage in terms of auditing municipal financial statements in 2020.
|Directorate/federal office responsible||
|Budget||Current phase Swiss budget CHF 8’500’000 Swiss disbursement to date CHF 0 Budget inclusive project partner CHF 36’204’500|
|Project phases||Phase 1 01.06.2020 - 31.12.2024 (Current phase)|