# **Box 2: Tunisian government actions to support firms in difficulty during the crisis and spur the export sector**

To mitigate the impact of the crisis, the Tunisian government introduced a number of measures to secure the recovery of eligible* export companies in difficulty by improving their cash flow and lowering their financial costs. These measures did not include support to local banks as the government considers that they have not been affected by the crisis. Banks were rather instructed to be more flexible with companies affected by the crisis, to try to reschedule their outstanding commitments and to avoid their closure.

- **Some of the measures targeted at firms in difficulty**

1. Support by the State of 50% of the contribution to social security during the appeal period to reduce working time due to the slowdown in their activity.

2. Support by the State of the contribution to social security when technical workers are unemployed because of the reduction in business in foreign markets.

3. Support by the State of 50% of the cost of insurance of export and the encouragement of “Compagnie Tunisienne pour l'assurance du commerce extérieur” (COTUNACE) to carry out the reinsurance of risks. Furthermore, the State increases the COTUNACE capital by 6 million dinars (MDT) in addition to the MDT4 by stockholders.

4. Support by the State of two interest rate points for exporters rescheduling their debt.

5. Allow credit institutions to deduct the ordinary and compound interest rates and interest on arrears which these institutions have foregone under the rescheduling operation in the property tax on companies.

6. Reduced refund time for tax credits and accelerated release of companies' claims in respect of public procurement.

7. Enlarging the access to FAMEX 2, the Export Market Access Fund, to include 200 new companies during the 2009, in addition to the 800 current beneficiaries.

8. Enable anti-dumping mechanisms and implement a specific program to reduce parallel trade.

9. Increased budget for fairs and exhibitions and to intensify campaigns to promote tourism.

- **In addition, the Tunisian government has engaged in an ambitious reform program supported by a World Bank lending project to enhance the competitiveness of the economy:**

1. Reduce the number of MFN tariff bands from 9 to 5 by 2011 with the objective to reach an average MFN rate of 15%.

2. Streamline the non-tariff measures and import control techniques.

3. Implement the Single Window in the main port by 2011.

4. Put in place an information system to fight against counterfeit.

5. Elaborate a strategy to promote services exports, notably health care services, ICT, and professional services.

6. Reduce the VAT refund time for exporters to 7 days 7. A number of measures to modernize the financial sector and improve the business environment.

- *Eligibility criteria: Proof of a real decline of activity; Proof of non-payment by customers; Having suffered cancellations of orders; and having received a request for significant drop in orders that were already planned. In addition, measures 1 and 2 are available for totally exporting companies only.

_Source: Consultant’s report and World Bank 2009_ 29