VZCZCXYZ0000
PP RUEHWEB

DE RUEHTU #1210/01 3431139
ZNR UUUUU ZZH
P 081139Z DEC 08
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 5802
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUCNMGH/MAGHREB COLLECTIVE

UNCLAS TUNIS 001210 
 
SIPDIS 
 
STATE FOR NEA/MAG (NARDI, HAYES, PATTERSON) 
STATE PASS USTR (BURKHEAD) AND USAID (MCCLOUD) 
USDOC FOR ITA/MAC/ONE (NATHAN MASON), ADVOCACY CTR (REITZE), AND 
CLDP (TEJTEL AND MCMANUS) 
CASABLANCA FOR FCS (ORTIZ) 
AMMAN FOR ESTH HUB (BHALLA) 
CAIRO FOR FINANCIAL ATTACHE (SEVERENS) 
LONDON AND PARIS FOR NEA WATCHER 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD TS
SUBJECT: TUNISIA: ECONOMIC HIGHLIGHTS 
 
REF: TUNIS 1193 
 
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Summary 
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¶1. (U) This cable contains highlights of recent economic 
developments in Tunisia on the following topics: 
 
¶A. GOT Ratchets Down Projected 2008 GDP Growth 
¶B. Tunisia Asks For an "Advanced Status" With the EU 
¶C. Tunisia to Offer Telephone License in 2009 
¶D. Tunisia Enticing New FDI 
¶E. Tunisia's Foreign Investment Increased 38 Percent 
¶F. Tunisia Gets More Power Stations 
¶G. Gulf Finance House Still on Track 
 
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GOT Ratchets Down Projected 2008 GDP Growth 
------------------------------------------- 
 
¶2. (U) Prime Minister Mohamed Ghannouchi officially lowered the 
expected GDP growth rate from 6.1 percent to 5.1 during a press 
conference November 23.  This is the first statement by the GOT 
recognizing the impact the financial crisis is having on the 
Tunisian economy.  Previous statements by GOT officials focused on 
assuaging popular concerns about possible declines in FDI, exports, 
and tourism revenue.  The IMF and World Bank both ratcheted back 
their estimations for Tunisia's 2008 GDP growth rate shortly after 
the financial crisis hit. 
 
--------------------------------------------- ---- 
Tunisia Asks For an "Advanced Status" With the EU 
--------------------------------------------- ---- 
 
¶3. (U) The seventh session of the EU-Tunisia Association Council met 
November 11, to discuss the EU-Tunisia relationship.  Morocco's 
relationship with the EU was recently upgraded to "advanced status", 
a designation that the GOT is now also hotly pursuing.  The topic 
was central in a November 14 meeting between President Ben Ali and 
Portuguese Foreign Minister Louis Amado. Reportedly, the EU and 
Tunisia agreed to establish an ad-hoc committee to define the 
framework of a reinforced partnership and of more privileged 
relations.  (Note: Tunisia was the first Mediterranean country to 
sign an Association Agreement with the EU in 1995.  The agreement 
created a free trade zone for industrial products that went into 
effect on January 1, 2008.) 
 
----------------------------------------- 
Tunisia to Offer Telephone License in 2009 
----------------------------------------- 
 
¶4. (U) The GOT announced an international tender for a new 
fixed-line and mobile telephone license.  The GOT expects the sale 
to be complete by the end of 2009 and is asking for tenders to be 
submitted by May 5, 2009.  State-controlled Tunisie Telecom was 
semi-privatized in 2006 when Dubai Telecom DIG purchased 35 percent 
for TD 3.05 billion (US $2.253 billion).  Earlier in 2002, the GOT 
awarded a GSM license to a joint venture of Kuwait's National Mobile 
Telecom Watanya and Egypt's Orascom Telecom, effectively 
establishing Tunisiana, for TD 544 million(US $454 million). 
According to a European industry magazine, Tunisia has an 82 percent 
mobile phone penetration rate with currently 8.1 million 
subscribers.  The sale of this duel fixed/mobile license is a 
lucrative source of hard currency for the GOT, which is facing lean 
times ahead because of expected declines in remittances, exports and 
foreign direct investment. 
 
------------------------ 
Tunisia Enticing New FDI 
------------------------ 
 
¶5. (U) Prime Minister Mohamed Ghannouchi announced on November 23 
the use of European Investment Bank and multiple bilateral loans to 
finance two funds aimed at supporting continued foreign investment 
in Tunisia.  The first fund, with more than 100 million Euros (US 
$128 million), is a GOT initiative to preserve the pace of foreign 
direct investment and related job creation by making access to 
credit easier for prospective investors.  The second fund is for 
existing investments by foreign companies to facilitate their access 
to credit for on-going operations.  (Comment: The GOT continues to 
bank on foreign direct investment in lieu of expanding private 
domestic investment.  While foreign companies may have easier access 
to credit, no new programs appear to be on the horizon for Tunisian 
SME firms.) 
 
--------------------------------------------- ---- 
Tunisia's Foreign Investment Increased 38 Percent 
--------------------------------------------- ---- 
 
¶6. (U) Tunisia's Foreign Investment Promotion Agency recently 
reported that FDI increased 58 percent, reaching 2.28 billion TD (US 
$1.68 billion) during the first ten months of the year.  The GOT 
combines the tourism and real estate sectors for the purpose of 
totaling foreign direct investment (FDI).  This combined category 
reached TND 183.6 million (US $153.7 million) an increase over the 
same period y-o-y of 21.2 million TD (US $17.6 million) during the 
same period in 2007.  The spike is explained by Libyan investments 
in hotels.  The 60 percent privatization of the state insurance 
company STAR by French-OCEOR combined with the 60 percent 
privatization of the Kuwait-Tunisian Bank (BTKD) explains why 
services-related FDI grew 149 percent year-on-year to 411.0 million 
TD (US $295 million).  The services sector represents 45 percent of 
Tunisia's gross domestic product and is expected to reach 50 percent 
by 2011.  FIPA attributes the creation of more than 14,000 jobs to 
the incoming FDI. 
 
-------------------------------- 
Tunisia Gets More Power Stations 
-------------------------------- 
 
¶7. (U) Gulf press agencies announced that Tunisia recently signed a 
financing agreement with the Islamic Development Bank for two power 
stations, one in Feriana in the west and Thyna in the east.  General 
Electric was selected to build the two 126 megawatt power plants. 
Tunisia's interest in assuring its energy independence was the theme 
of recent meetings granted to a traveling US delegation on the topic 
of Nuclear Energy and Non-Proliferation (reftel).  The project 
stands at 250 million TD (US $180 million) and is expected to take 
three years to build. 
 
-------------------------------------- 
Tunis Financial Harbor: Still on Track 
-------------------------------------- 
 
¶8. (U) On November 12, Mr. Issam Youssef Jinahi, Executive President 
of Gulf Finance House (GFH), confirmed that construction on the 
planned Tunis Financial Harbor (TFH) will start in early 2009. 
(Comment:  His statement was likely aimed at assuaging concerns 
about future Gulf investments.)  The TFH will be located in the 
Raoued North, Tunis and just 25 minutes from the Tunis Carthage 
airport.  The TFH was announced by President Ben Ali on December 17, 
2007 and aims to create an offshore financial services industry and 
a world-class International Financial Center to rival London's 
Financial Center in sheer size. 
 
GODEC