COVID policy Response

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T HE C ENT RA L BA NK

O F T UNISIA ’S COV ID-

19 PO LICY RESPO NSE:

PERSPECT IV ES A ND

C HA LLENG ES.

A KRA M S MAC H

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Outline:

I- Overall analysis of the Economical Situation in

Tunisia during the Pandemic.

II- Impact of the exceptional decisions of the

Central Bank of Tunisia facing COVID-19.

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I- Overall analysis of the Economical Situation in Tunisia during the

Pandemic:

It’s been long since the novel Corona virus of 2019 has passed from a mere health issue to

a global event that not only marks this year but probably the whole decade. The social and

economic repercussions of the pandemic might prove to be even more serious than the health

ones. Most economic, cultural and social activities have been put on an indefinite hiatus. This has

pushed governments into panic mode, and people into fear and angst. Since working online isn’t

very ubiquitous in Tunisia for logistical reasons -and maybe even cultural ones- most households

found themselves either living off of their savings or having to work anyway and put their safety

at risk. However, there has been a colossal demand shock to say the least. Global demand turned

into an inelastic existential fight for medical supplies exemplified by purchase of supplies set to

be sent from China to France by the US for a ridiculously higher price. Meanwhile, local demand

has morphed into a post-apocalyptic hoarding contest. Households are racing for food and, in

some countries, toilet paper rolls. In Tunisia, local production of food actually increased through

government initiative, but the increase was not high enough to fulfil the hoarding demand.

Similarly, the medical and pharmaceutical market is taking a central position in the Tunisian

economy. The ministry of health has resorted to price controls in products such as hand

sanitizers, and this has resulted in shortages in the related products. The response was to

criminalize hoarding pharmaceutical products for profit, and to attempt to monopolize the supply

in order to make sure that as many people as possible can access the highly demanded sterilising

gels and protection gear. This brings us to the regulating authorities. Tunisia has classically had a

relatively high level of health expenditure compared to other Arab nations.

Aside from food and pharmacy, the demand for basically everything else fell

significantly. Online shopping isn’t as popular in Tunisia as it is in other places of the world, and

people soon discovered that they are actually saving money by staying at home. Though this

might sound awesome to the average working-class Tunisian at first glance, it is actually

catastrophic on a macro level. If everyone is getting paid but isn’t spending it as much as they

would normally do, the businesses employing these people wouldn’t be making any sales, and

thus would go out of business precipitately. The lockdown has turned the economy into a ticking

bomb, and businesses into dominos that will fall one after the other as the clock ticks with the

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smaller ones being the first to fall. Companies would struggle for survival and

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