Power Cuts, Protests, and (Lack of) Policy: Tunisia’s Economy Under Pressure

A man looks at his smartphone while waiting for electricity to be restored in a street plunged into darkness during a power cut in Ariana, Tunisia, on July 14, 2026. (Photo by Chedly Ben Ibrahim/NurPhoto) Development & Economy Tunisia Power Cuts, Protests, and (Lack of) Policy: Tunisia’s Economy Under Pressure These past few months, Tunisians have been protesting the country’s worsening socioeconomic conditions and living standards. Officially, however, the economic growth indicators are on the rise. So what is happening? Sahar Mechmech July 30, 2026 July 30, 2026 In the past week and half, country-wide protests broke out in Tunisia condemning sweeping electricity and water cuts that the government implemented in the middle of a heatwave, as the country’s infrastructure struggled to meet power demands. The cuts come in a socially charged context, as Tunisians have been protesting against rising costs of living. For instance, on May 16, hundreds of Tunisians took to the streets, decrying repression and worsening socioeconomic conditions and living standards. Yet, as recently as the end of April, President Kais Saied reiterated the success of Tunisia’s policy of self-reliance in bringing down inflation and setting growth indicators on the rise. He is not wrong. Officially, growth has somewhat improved, inflation is indeed down, and unemployment has slightly improved. So, what is driving public anger? A closer look at Tunisia’s domestic economic prospects and realities shows fragility, high social tensions, and domestic political rifts, driven—not in small part—by the failure of economic indicators to be reflected in the lived realities of Tunisians. The situation is softened by expanding international partner financing that, at times, alleviates pressures and at others worsens them. Overoptimism or premature celebrations In 2026, the government does not propose a break from the pre-July 2021 economic policies of government spending restrictions and cuts to taxes for corporations and high-income individuals. After radical tax reforms in 2025 improved the distribution of taxes and increased the tax efforts of corporations, the 2026 Finance Law, Tunisia’s annual tax and budget law, falls flat in terms of addressing the Tunisian economy’s structural issues. Increases in social spending fail to catch up to inflation, which means there will be an implicit cut to social services. And there are no deep structural reforms that target the monopolistic, rent-seeking actors underpinning the fabric of Tunisia’s economy. Since Tunisia’s independence in the 1950s, this group of politically-backed economic actors has erected an arsenal of regulatory barriers to entering key economic sectors and controls most of the private financing in the economy. The law also continues the years-long pattern of risky, domestic borrowing from the Central Bank at a 0 percent interest rate without achieving growth commensurate with the borrowing, threatening to fan inflation. Despite the lack of structural reforms, the 2026 state budget projects a 3.3 percent growth for the year, above the 2.1 percent rate expected by the International Monetary Fund (IMF), representing a significant gap. Less growth means fewer resources for the state to meet ever-growing social needs in the midst of a cost-of-living crisis. The budget also assumes a price of around $60 per barrel of oil, an assumption undermined by skyrocketing energy costs resulting from the Iran war. The price reached over $100 a barrel several times this year and, as of July 29, was at around $90 a barrel. Tunisia remains an energy-importing country with energy subsidies, and the unexpected rise in the price of oil will cost Tunisia more in imports, eating at precious hard currency reserves of dollars and euros it needs to pay for essential imports from its trade partners. The rise in oil prices will also cost the state more in terms of spending on energy subsidies in order to keep the price of hydrocarbons stable on the domestic market. The higher-than-expected prices will lead to deeper budget deficits, an increase in the need to borrow, and perhaps growing pressure to cut spending to manage budget imbalances. Pressures on hard currency threaten the ability of Tunisia to import necessary products, including food, medicine, and energy, and could lead to shortages similar to those experienced in 2023 Global inflation resulting from the Iran war also threatens to erode remittances from Tunisians abroad, a key source of hard currency necessary for imports and accounting for 30 percent of reserves in 2024. The war has caused serious concerns of inflation in Europe, where most of the Tunisians abroad reside, potentially leading to lower remittances. Tourism, another key source of hard currency, also faces risks. Despite government assurances that Tunisia’s tourism was not affected by the regional war, early indicators are showing slowdowns and decreases in reservations. Pressures on hard currency threaten the ability of Tunisia to import necessary products, including food, medicine, and energy, and could lead to shortages similar to those experienced in 2023. Signs of such restrictions are already evident. In March, the Tunisian Central Bank issued new guidance on restricting imports to maintain its limited supply of dollars and euros. The guidance stated that imports of “non-essential” products—such as clothes, toothpaste, and toilet paper—have to be made in cash, not credit. The decision was criticized by prominent organizations such as CONECT, an organization representing employers and businesses, which described the guidance as a potential barrier to growth, while ALERT, an organization working on combating monopolies in Tunisia, warned the guidance could entrench monopolistic practices in the import/export sector, as large companies are more likely to have cash on hand than smaller companies. The restrictions on imports threaten to worsen existing shortages in medicine, food, and other essential commodities. Hairline fractures between the presidency and parliament on the economy At the same time as economic pressures rise, Saied’s government finds itself facing mounting political pressures. Parliament, which was closely aligned with Saied following the 2022 legislative elections, has increasingly disagreed with the government on economic issues. In April 2025, the parliament refused to pass a loan, citing unclear benefits. During the 2026 Finance Law discussions, parliament rejected proposals by the Finance Ministry and passed others with strong objections. The Finance Minister even walked out of a session with parliament following a heated argument with some MPs. During discussions on controversial solar energy concession deals, several MPs denounced the laws, some calling them dangerous, colonial, humiliating, extractive, and a breach of energy sovereignty. In response to the backlash and before the vote on these concessions, President Saied fired the Industry and Energy Minister as well as the Director General of Electricity and Renewable Energy, though all the deals were eventually passed. More recently and following the sweeping electricity and water cuts in July, the parliament held a session on July 27 to discuss the cuts where MPs criticized the situation and the absence of an official government response to it. MPs also criticized the government for not being present at the session, though one MP stated that parliament had not issued any official invitation or summons for the government to the session. These tensions should not be read as direct breaks with Kais Saied. Parliament continues to prioritize and pass many of his key reforms in relation to what he dubs as his “legislative revolution,” which fundamentally restructured Tunisia’s laws. The tensions can perhaps instead be considered more of parliament’s attempt to slightly distinguish itself from Saied and his inability to adequately deliver on the economy, especially as Tunisia is heading to parliamentary elections in 2027. Tensions also go beyond the political space, into the wider civic space. Labor and civil society: The old-new scapegoats In response to rising economic and political tensions, the government is attempting to repeat the approach it successfully deployed in 2023: offering scapegoats. Saied continues to reference mysterious saboteurs, without naming them. He continues to sacrifice members of his cabinet to assuage public anger, such as the aforementioned firing of a minister. His supporters, in parliament, on the ground, and on social media, continue to center undocumented sub-Saharan migrants as drains on economic resources and a threat to national security. His years-long battle with Tunisia’s leading labor union, the Tunisian General Labor Union (UGTT), has escalated this past year. And the crackdowns on civil society that Saied considers agents of foreign interference have picked up in the last few months, with authorities suspending and suing to permanently close civil society organizations and jailing activists, journalists, judges, and even dissenting MPs. Much like 2023, the repression is meant to distract from chronic economic issues and empty the political and civic space of opposition The most recent wave of criminal investigations is targeting civil servants working on the electricity file. This along with the President’s statement that these cuts are “unusual occurrences” and that “the state will not stand idly by while anyone seeks to harass citizens and inflame the situation” seems to be an attempt to interpret these major disruptions as a product of a conspiracy against the country. This framing contradicts the statements by the National Electricity and Gas Company (STEG) union that attribute the cuts to increased electricity demand exceeding production during the most recent heatwave. The challenge of meeting electricity demand is made harder by the lack of investment in the electricity production, with the last major electricity production station having been inaugurated in 2019. In explaining the lack of investment, some experts have pointed to the lack of resource allocation by the state, the failure of the government and state-owned enterprises to pay their full debts owed to STEG for their consumption of electricity, as well as the failure of the government to pay STEG for the universal electricity subsidies that it offers to citizens. Much like 2023, the repression is meant to distract from chronic economic issues and empty the political and civic space of opposition, leaving Saied as the only arbiter for decision-making in Tunisia and the only interlocutor for Tunisia’s international partners. Tunisian diplomacy pushing for international alliances Contrasting with internal rifts, Tunisia is ramping up engagement and financial borrowing with a number of its international partners. On the North African side, Tunisia continues to grow closer to Algeria, signing over 20 cooperation deals in late 2025 in a wide range of sectors, including a controversial military cooperation agreement. Recently in an interview, the Algerian President issued a strong statement linking the security of the two countries and reiterating Algeria’s commitment to defending Tunisia against terrorism. Relations with Libya also seem to have picked up, with a high-level meeting between the Tunisian Prime Minister and the head of the Libyan parliament, a new Memorandum of Understanding on labor market cooperation, the announcement of plans for a new maritime route, and new plans for a shared aquifer. All indicate Tunisia’s desire to position itself as an active North African partner, allowing it more privileges in accessing energy from its two energy-rich neighbors. Tunisia also saw an increase in engagement with partners across the Mediterranean as well as international financial institutions, including new loans from the European Bank for Reconstruction and Development, the European Investment Bank, the World Bank, the African Development Bank, reinforcement of Euro-Tunisian agreements, and updates to the migration cooperation with Italy. Much of this financing aims to stabilize the country and decrease irregular migration in Tunisia, both as a country of origin and a country of transit. However, the fallout from the recent solar energy concessions clearly shows: if international financing lacks public buy-in, it could create backlash and fail to address social and political tensions. In the case of renewable energy and despite its necessity to ensure the energy security of Tunisia, the public is seeing the government and parliament gifting foreign investors deals and setting up an underwater cable to export energy to Italy, while Tunisian companies wrestle with difficult conditions and the country experiences repeated blackouts. Out of the crisis and into prosperity Despite the ramping up of international financial support, the political and social status quo in Tunisia remains highly fragile. External support alone will not be sufficient to stabilize Tunisia’s economy or social anger Domestically, more seriousness is needed in identifying and dismantling structures that prevent competition and allow monopolies to persist, including the high costs for loans for investment, and the complicated and ever-changing administrative barriers to starting and running businesses. Doing so will allow better access to business and financing opportunities for small and medium enterprises, which are the vehicles of sustainable economic growth. The government also needs to rebuild its credibility with the public by investing properly in infrastructure and social spending to meet the needs of the population. Finally, the government must cease all counterproductive repressive practices that have only fanned the flames of public feelings of anger and dispossession. Tunisia’s international allies, on the other hand, need to reframe financing around addressing the real drivers of irregular migration: Tunisia’s structural issues and lack of adequate social spending. Economic cooperation efforts, including on energy, need to build public buy-in by being more transparent in terms of ownership, prices, expected job creation, government revenues, and environmental impact. Without transparency and accountability, risks of backlash and tensions will continue to accumulate. External support alone will not be sufficient to stabilize Tunisia’s economy or social anger. Only deep structural reforms, a new social contract, and a return to a democratic, open context can alleviate the current social anger and build a stable, sustainable, and inclusive economy capable of meeting the basic needs of people. Sahar Mechmech is the Inclusive Economies Manager at TIMEP. 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