Fiscal Reform for a Strong Tunisia

The CGE model is a tool used to assess the macroeconomic, sectoral, and social implications of fiscal reforms. The Ministry of Finance, UNESCWA, and the World Bank were key stakeholders involved in the development of the model and its interface. The consultancy's objectives were met, with a user-friendly interface developed, a model guide written for non-technical users, and documentation created for government experts to alter, extend, update, and maintain the model. Policy simulations were also run to demonstrate the model's capabilities. The outputs of this assignment are critical for assessing the implications of fiscal reforms, and awareness of the model's assumptions is essential for contributors. Key observations from the consultancy include the importance of involving all stakeholders in the development of the model and its interface. The Ministry of Finance's participation in the design of the fiscal block should be reinforced, and the externalities of public investment should be studied and discussed. The fiscal block should be more detailed to take into consideration the efficiencies of the tax collection system, and the business-as-usual scenario should be adjusted to align with the 2020 finance law. The consultancy encountered several issues, including the need for the Ministry of Finance to be more involved in the design of the fiscal block and the importance of studying the externalities of public investment. Recommendations were made to address these issues, including the need for a more detailed fiscal block and the adjustment of the business-as-usual scenario. The expected follow-on activities include training the staff of the Ministry of Finance on the development of CGE models and the use of the interface. This training will enable the Ministry of Finance to effectively utilize the CGE model and its interface to inform fiscal policy decisions. The development of the CGE model and its interface is a critical step towards achieving a strong and sustainable fiscal reform in Tunisia.