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DE RUEHTU #2684/01 3051525
ZNY CCCCC ZZH
P 011525Z NOV 06
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 2138
INFO RUEHAD/AMEMBASSY ABU DHABI PRIORITY 0806
RUEHAS/AMEMBASSY ALGIERS PRIORITY 7328
RUEHLO/AMEMBASSY LONDON PRIORITY 1202
RUEHNK/AMEMBASSY NOUAKCHOTT PRIORITY 0794
RUEHFR/AMEMBASSY PARIS PRIORITY 1655
RUEHRB/AMEMBASSY RABAT PRIORITY 8246
RUEHTRO/AMEMBASSY TRIPOLI PRIORITY 0418
RUEHCL/AMCONSUL CASABLANCA PRIORITY 4008
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 TUNIS 002684 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR NEA/MAG (HARRIS) 
STATE PASS USTR (BELL), USPTO (ADLIN AND ADAMS), USAID 
(MCCLOUD) 
USDOC FOR ITA/MAC/ONE (ROTH), ADVOCACY CTR (JAMES), AND 
CLDP (TEJTEL) 
CASABLANCA FOR FCS (ORTIZ) 
LONDON AND PARIS FOR NEA WATCHER 
 
E.O. 12958: DECL: 11/01/2016 
TAGS: ECON EFIN TS
SUBJECT: TUNISIANS FEEL PINCH OF HIGH PRICES THIS RAMADAN 
 
REF: 05 TUNIS 2409 
 
Classified By: CDA David Ballard for Reasons 1.4 b and d. 
 
¶1. (SBU) Summary: Ramadan spending combined with rising 
inflation hit many Tunisians in the pocket book this year. 
While the GOT attempted to put its best foot forward by 
keeping prices low and stepping up enforcement of price 
controls, these measures did little to address rising 
inflation and continued high unemployment.  Instead, the GOT 
has aggressively disputed the notion that Tunisians may have 
difficulty making ends meet, viewing any discussion of 
poverty as a blemish on the country's image as a 
developmental success story.  End Summary. 
 
¶2. (U) Even though Ramadan is a month of fasting, it is 
traditionally a period of increased consumption, with 
Tunisian families preparing elaborate iftar meals to break 
the daily fast and purchasing clothes and other gifts to 
celebrate the end of Ramadan during the Eid holiday.  This 
year, the start of Ramadan came on the heels of the September 
15 start of the school year, creating a continuous period of 
spending that put a dent in many Tunisians' bank accounts.  A 
cartoon in Arabic daily Ash-Sharouq shows a featherless 
chicken that has been plucked bare by three hands 
representing the start of the school year, Ramadan, and Eid. 
Many Tunisians complained to Econoff that they had no time to 
recover from the large purchases of school supplies and new 
clothes before starting the second round of spending expected 
during Ramadan.  According to the Ministry of Commerce, 
consumption during Ramadan typically rises an estimated 30 
percent, with particularly pronounced increases for food 
products such as canned tuna (200 percent) and bread (150 
percent).  One local paper reported that the Bir El Kassaa 
wholesale market, which supplies local markets in the greater 
Tunis area, distributed more than 82 thousand tons of 
agricultural products, 33 thousand tons of fish, and 52 
million eggs this Ramadan. 
 
¶3. (U) While increased spending and resultant higher prices 
during Ramadan are not out of the ordinary, Tunisians have 
had to contend with rising inflation throughout this year. 
According to the latest Central Bank figures, inflation 
reached 4.7 percent for the first nine months of 2006, up 
from 1.6 percent over the same period in 2005.  In order to 
make ends meet, many Tunisians have taken advantage of the 
increased availability of consumer credit, creating a trend 
towards greater indebtedness among Tunisian households. 
Between 2004 and 2005, the national savings rate dropped from 
22 to 21.3 percent.  According to French daily Le Temps, the 
Central Bank issued a memo to banks in July asking them to 
limit the extension of credit.  Several banking contacts have 
remarked that the growth in consumer lending has outpaced 
private sector investment during the past year.  In 
September, the Central Bank raised its rate from 5 to 5.25 
percent to curb inflation and restrain credit. 
 
¶4. (U) Every Ramadan the GOT makes a concerted effort to meet 
increased demand and keep prices low.  This year, for 
example, in order to meet higher demand for food products, 
the GOT accumulated stocks of products such as eggs, milk, 
and chicken in advance of Ramadan, which were then released 
on the market to reduce the tension between supply and demand 
and thereby keep prices down.  According to local press 
reports, the Tunisian state-owned meat company, Ellouhoum, 
also resorted to importing meat from Ireland.  Ellouhoum 
reportedly ordered 10 thousand frozen lamb carcasses and 166 
metric tons of turkey for the month, and 160 to 180 tons of 
beef per week.  Many food products, such as meat, oil, bread 
and milk, have fixed prices or fixed profit margins.  Despite 
this, entrepreneurial shopkeepers often attempt to flout the 
GOT price controls and make some extra money.  This year the 
GOT was particularly active in registering infractions (and 
then publicizing these efforts) against sellers, with 8,520 
infractions registered by October 18 for offenses such as 
 
TUNIS 00002684  002 OF 002 
 
 
raising prices or not marking prices.  After the first ten 
days of Ramadan, the GOT touted its success in registering 
2.5 times as many infractions as during the same period in 
¶2005. 
 
¶5. (SBU) While the GOT attempted to ease the burden during 
Ramadan, it has also aggressively disputed the notion that 
Tunisians may have difficulty making ends meet.  During the 
week of October 11, a group of NGOs, along with the General 
Union of Tunisian Workers (UGTT), sponsored a week-long 
series of programs on poverty in Tunisia to coincide with the 
International Day for the Eradication of Poverty on October 
¶17.  The groups called on the GOT to eradicate poverty and to 
help the unemployed find jobs.  In a thinly veiled response 
to the poverty series, Hedi M'henni, Secretary General of the 
ruling Democratic Constitutional Rally (RCD) party, stated 
that the rate of poverty in Tunisia has dropped below four 
percent and emphasized that this refuted "the allegations 
propagated by a handful of detractors who have no other 
worries than to place doubt on the success of the country." 
(Note: The poverty rate is calculated using the standard one 
dollar per day definition.  End Note.)  Meanwhile, private 
television station Hannibal TV canceled a daily Ramadan 
series entitled "Without An Invitation", during which the 
host of the show celebrated iftar with average, or even poor, 
Tunisian families.  Some sources at Hannibal TV claim GOT 
pressure motivated the cancellation, while others point to 
poor ratings as the cause, despite anecdotal evidence to the 
contrary.  While the show, back for its second year, 
highlighted the sometimes difficult reality faced by poor 
Tunisian families, its message was not overtly political. 
Part of the show's popularity was also due to the game 
show-like appeal of the host bringing gifts such as satellite 
dishes and refrigerators. 
 
¶6. (C) Comment: Although the GOT attempted to ease the burden 
of Ramadan spending for Tunisians, its measures did not 
address the difficulty created by rising inflation and high 
unemployment.  The GOT's recent actions and statements 
regarding the week-long series on poverty and the Hannibal 
television show suggest that poverty has become a taboo 
subject.  While the GOT has been quick to view any discussion 
of poverty as a blemish on the country's success, its 
unwillingness to allow public discussion or examination of 
the conditions of Tunisia's poor is depressingly familiar to 
Tunisian and foreign observers who have come to expect GOT 
panic and over-reaction to anything that might be remotely 
critical of GOT policies or their results.  End Comment. 
BALLARD