Tunisia stares at looming shortage of bread as bakers strike over unpaid US$80M subsidy funds

TUNISIA – Tunisia is staring at a looming shortage of its most loved food commodity, bread, following a strike by a majority of its bakeries over unpaid subsidy funds

The 3,100 bakeries representing 90 percent of the country’s state-subsidized bread makers closed their doors on Wednesday 7, demanding the payment of over $80 million in subsidy funds

In Tunisia, bread is among the most basic consumed foods with an average consumption per inhabitant estimated at 74 kg per year, according to data from the National Institute of Consumption (INC).

The strike was announced by Mohamed Bouanen, president of the National Trade Union Chamber of Bakers, on Monday 5 December after the state failed to fulfill its promise as agreed in October.

The protest action comes just two months after the October strike, with bakery owners now demanding the payment of 14 months of overdue subsidies.

The decision to put down tools was linked to struggles experienced by professionals in the sector, where they claim to not be able to bear the costs of the production of bread due to the accumulated debts by the government since 2021.

“We demand the full amount due to us and not compensation for a month or two. Bakers can no longer afford to pay their electricity bills or even their staff,” Bouanen said.

Tunisia began subsidizing staple foods in the 1970s as a way to help the poor during periods of rising global food prices.

However, the system has continued to increase strain on the country’s hard-pressed budget in 2022, the spending on subsidies has reached 8% of the country’s GDP-almost twice the share in 2021

The government was expected to subsidize up to 75% of the price of bread according to the laid down subsidy policy.

According to the policy, a large loaf (400 g) is currently trading at 0.27 dinar ($0.08) on the domestic market against a real value of 0.97 dinar ($0.3) while the price of the baguette (220 g) is 0.19 dinar ($0.06) against an actual price of 0.57 dinar ($0.17).

However, Tunisia is in the grip of a grinding economic downturn exacerbated by inflation that hit 9.8 percent annually in December, according to official figures.

In quest of alleviating the pressure, the government is currently negotiating a $2 billion to $4 billion loan with the IMF to cope with a budget deficit aggravated by the economic strain. A high-ranking Tunisian delegation went to Washington on Saturday in the hope of finalizing a deal.

The IMF however is demanding the gradual lifting of subsidies and the privatization of state-owned enterprises, which implies massive layoffs and a worsening of unemployment, already at 18% according to World Bank’s latest figures.

Bread supply in the country is now reliant on some 1,200 bakeries that are not under the subsidiary program and continue to operate normally.

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