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PP RUEHTRO
DE RUEHTU #2173/01 2331113
ZNR UUUUU ZZH
P 211113Z AUG 06
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 1652
INFO RUEHAD/AMEMBASSY ABU DHABI PRIORITY 0785
RUEHAS/AMEMBASSY ALGIERS PRIORITY 7273
RUEHNK/AMEMBASSY NOUAKCHOTT PRIORITY 0774
RUEHFR/AMEMBASSY PARIS PRIORITY 1620
RUEHRB/AMEMBASSY RABAT PRIORITY 8201
RUEHTRO/AMEMBASSY TRIPOLI PRIORITY 0382
RUEHCL/AMCONSUL CASABLANCA PRIORITY 3983
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 TUNIS 002173 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/MAG (MHARRIS) AND EB/CIP 
STATE PASS USTR (BELL), USPTO (ADLIN), USAID (METZGER) 
USDOC FOR ITA/MAC/ONE (ROTH), ADVOCACY CTR (JAMES), AND 
CLDP (TEJTEL) 
CASABLANCA FOR FCS (RORTIZ) 
PARIS FOR NEA WATCHER 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD ELAB TS
SUBJECT: TUNISIA ECONOMIC HIGHLIGHTS: JULY - AUGUST 14 
 
REF: TUNIS 1946 
 
¶1. (U) This cable contains highlights of recent economic 
developments in Tunisia on the following topics: 
 
¶A. Minimum Wage Increase 
¶B. Tunisian and Mauritanian Central Banks to Cooperate 
¶C. Arab Fund for Development Finances Tunisian Power Plant 
¶D. GOT to Liberalize the Cereal Sector 
¶E. GOT Blocks, Then Unblocks, Export of Tomato Paste 
 
------------------------------ 
¶A. MINIMUM WAGE INCREASE 
------------------------- 
¶2. (U) The Prime Minister announced an increase of 7 dinars 
(roughly 5 USD) per month in the Minimum Guaranteed Wage 
(SMIG) for the Tunisian-standard 48-hour work week and 6 
dinars per month in the SMIG for the Tunisian-standard 40- 
hour work week.  The monthly SMIG will now be 231 dinars (75 
USD) and 200 dinars (151 USD), respectively.  The Minimum 
Guaranteed Agricultural Wage(SMAG) will also increase by 245 
millimes (20 cents US) a day for a total minimum wage of 
7.129 dinars per day.  According to the government, 
approximately 280,000 workers will be affected by these wage 
increases. 
 
¶3. (SBU) Comment: While most workers receive at least the 
minimum wage, many Tunisian employers pay their workers less 
than the minimum guaranteed wage due to inadequate 
enforcement of the law.  Due to the high rate of 
unemployment, many Tunisians are willing to accept jobs 
below the minimum rate. End comment. 
 
--------------------------------------------- ---------- 
¶B. TUNISIAN AND MAURITANIAN CENTRAL BANKS TO COOPERATE 
--------------------------------------------- --------------- 
 
¶4. (U) The Governments of Tunisia and Mauritania signed a 
framework agreement that will improve cooperation between 
their two respective central banks.  The two banks have 
agreed to exchange information and experts in order to 
facilitate the movement of capital between the two countries 
and to prevent crises and shocks at both the regional and 
international levels. 
 
¶5. (SBU) Comment and Background: The agreement reflects the 
growing trade and investment between the two countries, 
especially in the IT sector.  In 2000, the Tunisian state- 
owned Telecom operator Tunisie Telecom became a shareholder 
in the Mauritanian state-owned telecom operator MATTEL.  In 
2005, the volume of the Tunisian IT sector's business in 
Mauritania totaled 27 million Tunisian dinars (roughly 20.7 
million USD).  In 2003 Tunisian exports to Mauritania 
totaled 4.1 million USD, growing to 9.2 million in 2005. 
End comment and background. 
 
--------------------------------------------- -------------- 
¶C. ARAB FUND FOR DEVELOPMENT FINANCES TUNISIAN POWER PLANT 
--------------------------------------------- -------------- 
 
¶6. (U) On July 6, the Arab Fund for Economic and Social 
Development signed an agreement to co-finance a USD 115 
million power plant in the city of Ghannouch. The loan is 
repayable over 20 years with an interest rate of 4.5 percent 
and a grace period of five years.  The investment provides 
funds for civil engineers and equipment, engineering 
studies, and for improving connections to the national power 
grid.  The Arab Fund has invested in 44 projects in Tunisia, 
representing a total investment of 2.2 billion dollars. 
 
---------------------------------- 
¶D. GOT TO LIBERALIZE CEREAL SECTOR 
---------------------------------- 
 
¶7. (U) According to the Director General of the Cereal 
Office, the GOT is moving towards the progressive 
 
TUNIS 00002173  002 OF 002 
 
 
liberalization of the cereal sector.  The process will 
concern two separate activities of the sector.  The Cereal 
Office and private operators have signed an agreement 
allowing private companies to harvest, collect, and store 
the domestic cereal crop.  The GOT is in the process of 
drafting the required legislation, expected by the end of 
2007, to allow private sector participation in this 
industry.  The GOT also plans to liberalize cereal imports 
by 2008-2009, starting first with the import of barley and 
flour. 
 
¶8. (SBU) Comment: This is not the first time that the GOT 
has announced plans to liberalize the importation of 
cereals.  As no concrete steps have been taken towards trade 
liberalization, the GOT's commitment to this reform remains 
unclear.  U.S. wheat would be very competitive in a 
liberalized Tunisian market as the Tunisian wheat market is 
likely to be more quality-responsive once the GOT loosens 
its grip.  The U.S. wheat industry would be well-positioned 
to compete against the low-quality, less-expensive wheat 
sourced from other countries.  End comment. 
 
--------------------------------------------- ------- 
¶E. GOT BLOCKS, THEN UNBLOCKS, EXPORT OF TOMATO PASTE 
--------------------------------------------- ------- 
 
¶9. (SBU) According to local reports, Tunisian Customs 
officials "informally", but temporarily, blocked the export 
of tomato paste by refusing to complete necessary export 
procedures.  Following complaints by tomato paste producers, 
the Minister of Commerce intervened to correct the 
situation.  This followed a reported 20 percent reduction in 
the tomato crop this year.  According to unconfirmed 
reports, the blockage could have been indicative of a desire 
to secure higher prices for this product, a staple of 
Tunisian cuisine, as Ramadan approaches.  Approximately two- 
thirds of Tunisia's tomato crop is normally turned into 
tomato paste.  Tunisia's annual production of tomato paste 
represents approximately 170 million dinars (129 million 
USD). 
 
BALLARD