Macroeconomic Stabilization and Early Economic Reform: The Seventh Development Plan, 1987–1991

Abstract

The replacement of Bourguiba was in many ways the essential precondition for structural reform of the economy. The new president, Zine el Abidine Ben Ali, was able to begin the reformulation of political structures, removing obstacles to reform literally from the top down and building on the early, but limited, implementation of the 1986 Stand-by agreement. A strategy had already been devised which was subsequently to be carried out under two major development plans, those of 1987–91 and 1992–6. The first was intended on the one hand to achieve macro-economic stability, and on the other to introduce the initial measures of structural liberalization, particularly in terms of sectoral (including public sector), financial and trade reform. The second phase of liberalization, which would take place during the subsequent plan, would consolidate these measures, with legislative arrangements to encourage foreign investment, accelerate privatization, develop the stock market, and deepen integration with overseas, particularly European, markets. In sum, within the space of ten years, it was intended that the economy should be transformed into a market economy with only a marginal role for the state in production, distribution and exchange.