TUNISIA

Tunisia is a semi-presidential republic, whereby the President is the Head of State and is directly elected for a five-year term. Legislative power is held by a unicameral parliament – the Assembly of Representatives of the People - whose members are elected by universal suffrage for a five-year term. Since the 2010 revolution, the country has experienced major political changes. These changes subsided somewhat when a new constitution was drafted and then adopted in January 2014 by the Assembly, which had been created in October 2011. A new constitution was adopted by referendum in July 2022, after the drafting process of this country profile. The new constitution establishes a presidential regime.

Tunisia is a unitary country with a two-tier system of subnational government, composed of regions and municipalities. The 2014 Constitution devotes thirteen articles to the consolidation of local democracy. It states that social justice and sustainable development are inseparable from decentralised power and participatory democracy. It establishes the autonomy of local governments - including free administration of their own resources, mechanisms of participatory democracy and end of a priori control (which means the obligation for these governments to request authorisation from the state public administration to take a decision nevertheless falling within their competence). Tunisia recognises the decentralisation process as a fundamental basis for the organisation and distribution of power. It aims to increase political, administrative and financial competences for elected local and regional governments so they can become proactive players in planning, implementing and delivering infrastructure and services at regional and local levels. One objective of the decentralisation policy is also to devolve power from the capital to the interior regions and correct economic and social disparities between the wealthier coastal regions and more deprived interior areas of the country.

The 2014 constitution devotes an entire chapter (Chapter VII, articles 131 through 142) to local government, specifying the principles of self-governing local councils, independent administration, and the financial autonomy of the local government units. According to Art. 131, “Local government is based on decentralisation. Decentralisation is achieved through local authorities comprised of municipalities, districts, and regions covering the entire territory of the Republic, and the legal personality as well as financial and administrative independence.” Based on the constitutions, municipal and regional councils should be elected through universal suffrage, while district councils are elected by the members of municipal and regional councils. The provisions of the constitution are still being implemented as of 2022, and some of these dispositions remain pending.

Since 2016, several changes have been introduced to the subnational government system. Between 2017 and 2018, Tunisia successfully adopted organic laws regarding the elections, the organisation and functioning of Local Authorities, as well as the Code of Local Authorities (Code des collectivités locales - CCL), in order to set a new global legal framework governing local authorities, reinforce the principles of the 2014 Constitution, formalise the deconcentrated authorities’ power and reinforce decentralisation. In January 2017, the parliament voted in favour of the electoral law organising the municipal election, respecting the principles of gender parity and positive discrimination established by the constitution. On 26 April 2018, the Assembly of People's Representatives (ARP) adopted the Local Authorities Code, which regulates the organisation of local power structures, their competences and their operating methods, in accordance with the processes of participatory democracy, in order to achieve, within the framework of the state’s unity, decentralisation and sustainable and equitable development. On 6 May 2018, the Independent High Authority for Elections (ISIE) successfully organised the first free and competitive municipal elections in the country's history.

On 23 November 2021 and following the Presidential Decree N 2021-197, the Ministry of Local Affairs was suppressed. Its powers, central and regional structures, as well as the loans and support fund for local authorities (la Caisse des prêts et de soutien des collectivités locales) and the Center for Training and Support for decentralisation (le Centre de formation et d’appui à la décentralisation) were transferred to the Ministry of the Interior.

TERRITORIAL ORGANISATION
MUNICIPAL LEVEL	INTERMEDIATE LEVEL	REGIONAL LEVEL	TOTAL NUMBER OF SNGs (2022)
350 Municipalities (Municipalités) )بلدية (		24 Governorates (Wilaya) )ولاية (
Average municipal size: 33 767 inhabitants
350		24	374

OVERALL DESCRIPTION: Tunisia has two tiers of subnational governments, made of 24 governorates and 350 municipalities. Since 2019, the governorates are divided into 264 delegations or districts (iklim), at the intermediate level. Yet the 2014 constitution does not name or define the attributions of these “district councils”, which have not yet been implemented, named nor defined. Therefore, they are not taken into account in this country profile.

REGIONAL LEVEL: At the regional level, governorates are mixed entities with both deconcentrated and decentralised administrative structures. Their role is to i) coordinate the implementation of development projects decided by the Government Ministries, ii) express socio-economic issues, and iii) coordinate projects between different Municipalities under the same governorate.

The Governor (Wali), who represents and primarily reports to the Interior Minister, runs the Governorate. Governors carry trusteeship over local authorities. They are appointed by the central government and are at the same time presidents of the regional councils.

On the other hand, each governorate is also managed by a regional council, as a decentralised authority, based on the 1989 Organic Law on Regional Councils. Articles 131 and 133 of the 2014 constitution stipulate that regional councils should be elected by direct universal suffrage. However, the date of the first regional elections has been postponed several times, without being held to date. Until regional elections are organised, regional councils are composed of: the governor (president of the council), deputies elected in the governorates (members) and chairs of the communes within the governorate (members). While governors do not have voting rights in regional councils, in practice their advice tends to be systematically followed. Consequently, governorates are both decentralised and deconcentrated entities.

The 24 governorates are very diverse in terms of area, demographic size and especially socio-economic development. The smallest had 114 474 inhabitants in 2019 (Tozeur) while the largest had 1 073 110 inhabitants (region of Tunis). While reducing regional economic and social disparities in Tunisia has been a key objective for many years, activity remains highly concentrated in coastal regions, and inequalities in living standards remain very large by international standards. Since 2011, the Government has restated the priority given to regional development, and the Strategic Development Plan 2016-2020 seeks to close the gap through a process of “positive discrimination”, which is enshrined in the 2014 Constitution.

MUNICIPAL LEVEL: Municipalities are governed by municipal councils as the primary decision-making bodies. The municipal council is presided by the mayor, who serves a five-year term. The mayor is nominated by the members of the municipal council, who are themselves directly elected by the population for a five-year term. The number of members of the council depends on the size of the municipality. The mayor is assisted in the management of the Commune’s affairs by the deputies, the vice-presidents, the presidents of the commissions and the secretary general of the municipality.

Until 2018, unlike the governorates, municipalities did not have significant powers. The CCL, which was adopted in April 2018, and took effect in January 2019, aims to bring more autonomy to the local governments, both in terms of assigned competences and financial autonomy. The first local elections since Tunisia’s revolution in 2011 took place on 6 May 2018. Members of the local councils were elected through a closed-list, proportional representation system with an electoral threshold of 3% (between 2011 and 2017, municipal councillors were appointed by the national government).

Since May 2016, municipalities have been created, or expanded, with the aim of covering the entire territory. By the end of 2021, approximately 187 municipalities have been enlarged and 86 have been created: 350 municipalities now cover the whole Tunisian territory, compared to 264 in 2013.

HORIZONTAL COOPERATION: Two or more municipalities may enter into agreements on matters of common interest in order to carry out projects, deliver services or operate public equipment/facilities. These agreements must be approved by the governor of the region, when the municipalities belong to the same governorate, and by the Minister of the Interior when the communes belong to two or more governorates.

The CCL defines subnational governments’ own, shared and transferred competencies. Article 134 of the 2014 Constitution recognises the competences of subnational governments and grants them delegated, as well as shared competences with the central government. The CCL includes these three categories in Article 13 (in general), Article 234 for municipalities and Article 295 for regions, under the terms own (exclusive), transferred and shared competences respectively.

Own competencies of municipalities primarily encompass urban planning and infrastructure projects. They also share responsibilities with the central government in economic development, urban transport, and maintenance of schools and primary health establishments. Transferred competences include the construction and maintenance of health institutions, educational establishments, cultural works and sports facilities.

The regional level of government is notably responsible for preparing and implementing the regional development plan. Governorates share competences with the central government in support of cultural and sport activities, preservation of natural zones, urban transport, and transferred responsibilities for the maintenance and development of public buildings and facilities located in the region, and the strengthening of economic, agricultural and industrial activities of a regional nature.

The political empowerment of local governments was reinforced after the 2018 elections. In particular, the agreement of the governor is no longer necessary for the decisions of the municipal council to become effective in areas that fall within the exclusive framework of their prerogatives. In general, greater devolution of responsibilities to regional and local self-governing bodies is gradually planned as part of the regional development strategy.

Main responsibility sectors and sub-sectors
SECTORS AND SUB-SECTORS	Regional level	Municipal level
1. General public services (administration)	Internal administration	Internal administration
2. Public order and safety
3. Economic affairs / transports	Construction and maintenance of roads and sidewalks; Municipal markets; Public buildings and facilities; Urban transport and economic development (shared)	Organisation and support of non-urban transport; Urban transports and distribution channels; economic development (shared)
4. Environment protection	Parks and green areas; Waste management;	Environmental protection
5. Housing and community amenities	Public lighting; Urban planning, Street cleaning	Territorial planning; Elaboration of the regional development plan
6. Health	Promotion of hygiene; Primary health establishments (shared)	-
7. Culture & Recreation	Promotion and management of cultural activities;	Culture; Sport; Youth activities
8. Education
9. Social Welfare

Scope of fiscal data: Governorates and municipalities.

SNA 2008

Availability of fiscal data: Low

Quality/reliability of fiscal data: Low

GENERAL INTRODUCTION: Subnational government finance is regulated by Law N 97-11 of 3 February1997, which promulgated the Local Tax Code, most recently amended in 2015. The governorates are mainly funded by transfers from the central government while tax revenue is only levied at the municipal level. The new 2019 CCL enables municipalities to set their own taxes and royalties. It grants local governments various rights related to public properties (streets, public squares, green spaces and others).

Article 8 of the law 2018-29 of 2018 of the CCL states that the central authority must assist local authorities in consolidating their own revenue to ensure a balance between revenue and expenditure. According to Article 131, the central authority should provide assistance to local authorities to achieve an equilibrium between revenue and expenditure. Hence, the State devotes, within the framework of the finance laws, grants to local authorities on the basis of their financing needs.

Subnational government expenditure by economic classification
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total expenditure	171	1.5%	3.8%	100%
Inc. current expenditure	132	1.2%	3.4%	77.2%
Compensation of employees	61	0.6%	3.4%	35.4%
Intermediate consumption	27	0.3%	12.7%	15.6%
Social expenditure	-	-	-	-
Subsidies and current transfers	39	0.4%	5.0%	22.9%
Financial charges	-	-	-	-
Others	6	0.1%	0.5%	3.4%
Incl. capital expenditure	39	0.4%	5.9%	22.8%
Capital transfers	3	0.0%	0.7%	1.5%
Direct investment (or GFCF)	36	0.3%	13.0%	21.3%

EXPENDITURE: In 2020, subnational government expenditure was equivalent to 1.5% of GDP and 3.8% of general government expenditure, against 2.1% and 7.8% respectively in 2016. The share of current expenditure in total subnational government expenditure has increased by 37 percentage points between 2016 and 2020, whereas the share of direct investment has decreased by around 5 percentage points. From 2010 to 2020, compensation of employees consistently grew, compared to other operating expenditure and investments.

DIRECT INVESTMENT: Subnational direct investment accounted for 21.3% of total subnational government expenditure in 2020, compared to 25.9% in 2016. This decrease may result from the fact that subnational governments played less of an investment role during the pandemic, and were evolving in a tight fiscal environment. The share of subnational government investment in GDP remains small (0.3%).

Subnational government investment in Tunisia is primarily dedicated to municipal waste management, road construction and maintenance and sewage systems. The decree 2014-3505 sets the framework for the new system of financing of local investments, through loans and subsidies.

Stimulating investment is a major objective of the government, as indicated in the 2023-2025 Development Plan and Tunisia Vision 2035, and development agencies are being set up in each governorate. There are currently three regional development offices, which each manage four governorates, and one commission in charge of the remaining ones, including Tunis. The 2015 law on public-private partnerships (PPP) gives local governments the power to enter directly into PPPs as a means of boosting the local economy and developing social infrastructure projects.

ⓘ No detailed data available for this country

Municipal solid waste management, road construction and maintenance account for a large share of total municipal spending (current and capital). Very little spending on social protection is decentralised and most basic services (water, transport, electricity, education and health) are managed by public agencies, at the deconcentrated governorate level.

Article 4 of the CCL testifies to legislator’s will to give municipalities a more pivotal role in economic and social issues. The Article 109 focuses on the notion of green economy and refers to one of its corollaries, social and solidarity economy. This mission is further encouraged by the central government, which engages according to the same article, in providing credance to support projects related to social and solidarity economy and/or contributing to the integration of rural women, as well as economically and socially vulnerable people.

Subnational government revenue by category
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total revenue	188	1.7%	4.7%	100%
Tax revenue	56	0.5%	2.3%	30.0%
Grants and subsidies	119	1.1%	-	63.6%
Tariffs and fees	5	0.1%	-	2.8%
Income from assets	4	0.0%	-	2.0%
Other revenues	3	0.0%	-	1.5%

OVERALL DESCRIPTION: According to the CCL, local government revenues must be consistent with their new responsibilities, as well as with their roles in economic, social and political development. Own resources are set out by the constitution and the CCL. In 2020, subnational governments in Tunisia were primarily financed through intergovernmental grants and subsidies, which amounted to 63.6% of their total revenues. Other local revenue came from tax revenues (whose share in subnational government revenue increased in 2020, compared with 22.2% in 2016), tariffs and fees for the use of services (2.81%), property income (2.4%) and other revenues (1.54%).

The reforms associated with the CCL are expected to bring more own-source revenues to subnational governments in the future.

TAX REVENUE: Tax revenues essentially go to municipalities, as there are no specific taxes payable to the governorate regional councils. Municipal taxes are regulated by Law N 97-11 of the 03^rd February 1997, enacting the local tax code. They include, notably, the tax on industrial, commercial and professional establishments (TCL), the property tax on buildings (TIB), the property tax on undeveloped land (TNB, with a tax rate of 0.3% set by decree). Taxes are collected by deconcentrated state services.

In 2020, recurrent property taxes (TIB and TNB) accounted for around 61.6% of subnational government tax revenue, 18.5% of subnational government revenue and 0.32% of GDP, a significant increase since 2016 (when it accounted to 15%, 3% and 0.1% respectively in 2016). Revenue from the property tax remain low compared with the average for OECD countries (where they account, on average, for 1.0% of GDP in 2020). Local governments have very low autonomy over tax bases and rates. Municipalities cannot create new taxes or fees. They have some leeway on the TIB reference price and the TNB tax base, which they can set within limits set by national decree, but this has been scarcely used as most communes set the price within the lowest range. The property and real estate taxes on built and undeveloped land are still under-exploited, due to census defects combined with low collection rates (around 20% of the amounts are effectively raised). It should be noted that the CCL obliges the Ministry of Finance to pay 50% of rental taxes to local authorities.

Other minor local taxes include the hotel tax (rate of 2% also set by decree), the tax on entertainment (rate of 6% set by decree) and the licence fees for licensed premises. The share of tax revenue in subnational government revenue has increased significantly since the introduction by the 2013 Fiscal Law of significant changes to the municipal tax system, such as the increase of the TCL and TIB bases, and the removal of the maximum tax limit of the TCL in 2021, which incurred an increase of fiscal resources for the major cities of Tunisia, and Tunis in particular.

GRANTS AND SUBSIDIES: The system of intergovernmental transfers in Tunisia is regulated by Art. 135, 136 and 141 of the 2014 Constitution, which states that the devolution of competences to subnational governments must be accompanied by transfers of resources. Grants and subsidies are the main source of subnational government revenue, accounting for 63.6% of their revenue. In 2020, most of the grants were capital grants (62.5%), while current grants accounted for 37.5%.

Until 2018, subnational governments used to first receive lump-sum grants from the Common Fund for Local Authorities (Fonds Commun des Collectivités Locales - FCCL). Established by Law N 75-36 and funded through the national budget, the Fund was abolished by the 2018 financial law (Article 11). It is replaced by an allocation, which is part of the MALE’s expenditure intervention budget. Other transfers include equipment grants through the Municipal Development Fund (or Caisse des Prêts et de Soutien aux Collectivités Locales), as well as capital transfers from sectorial ministries to finance investment programs on a case-by-case basis. The 2021 Finance bill suppressed the Cooperation Fund of Local Authorities (Fonds de Coopération entre les Collectivités Locales), which was introduced by the 2013 Fiscal Law. Its resources were transferred to the new Local Authorities Fund (Fond des Collectivités Locales).

The 2021 Finance bill announced the creation of a new support fund for decentralisation and solidarity between local authorities (Fonds de soutien à la décentralisation et à la solidarité entre les collectivités locales), an equalisation scheme intended to finance the budgets of local authorities. Its resources will enable to finance local authorities with the aim of strengthening their capacities and their financial autonomy, and helping them to bear their costs and improve their financial balance. This fund also aims to strengthen solidarity between local authorities and reduce disparities between them. The resources will be allocated as follows: 70% to the municipalities, 20% to the regions and 10% to the districts, and will be distributed taking into consideration the criteria relative to the number of inhabitants, unemployment rate, fiscal capacity, development index and borrowing capacity.

In addition, according to Article 138 of the CCL, local authorities have the right to receive private donations for the realisation of certain projects of general interest, related to economic, social or environmental development (in particular: the promotion of renewable energies, sanitation pipes and projects related to the gender approach).

OTHER REVENUE: According to the CCL (Article 139), local governments have the deliberative power to set fees, taxes and royalties. Hence, it grants municipalities the competence to set "any royalty" it deems necessary. On this basis, municipalities are able to set certain environmental fees, duties and taxes, by application of the “polluter pays” principle. Thus, even if the municipalities' fiscal power is not initial, Article 40 of the CCL allows them to realise development projects linked either to specific economic and social activities or to the innovative sector of "renewable energies".

Subnational governments collect a variety of user charges and fees, including licensing fees on beverage outlets, a series of tariffs applied to marketplaces, parking fees, building permits, etc. Subnational governments can set the tariffs of some of these charges within limits set by the central government. Furthermore, subnational governments collect rents from public properties. In 2012, other revenue altogether accounted for 6.3% of total subnational government revenue.

ⓘ No detailed data available for this country

FISCAL RULES: Articles 14, 20, 26 and 30 of the Budget Law 2007-65 require that local governments have balanced budgets on an annual basis. In case of non-compliance, Article 30 states that there may be individual sanctions. An independent body, the Institution Supérieure de Contrôle, is in charge of monitoring and auditing the local budgets, but its efficiency is limited by the lack of standardised accounting. A General Code of Conduct for Public Officials was released in 2014 to improve the delivery of public services at all levels of government.

DEBT: Local borrowing is authorised only to finance investment projects (“Golden Rule”). Loans for investment and capital goods are taken out from the Municipal Development Fund or Caisse des Prêts et de Soutien aux Collectivités Locales (CPSCL), under the authority of the Ministry of Interior. The loans are granted upon the approval and thorough analysis of the central government. As of 2017, the total municipal debt amounted to TND 150 million, obtained not just through the CPSCL, but also other private and public institutions. However, a Public Expenditure and Financial Accountability (PEFA) report on a sample of seven municipalities points to the limited monitoring and evaluation of loans.

In 2016, the Tunisian government took out a TND 100 million loan from the African Development Bank with the aim of remediating the financial insolvability and structural indebtedness of 65 municipalities and thereby reinforcing their creditworthiness. In 2022, the CPSCL mobilised a budget of TND 850 million, which are dedicated to be used to support municipalities.

TERRITORIAL MANAGEMENT OF THE CRISIS: During the COVID-19 pandemic, municipal councils established local crisis committees, where civil society organisations, elected officials and political parties took part, in order to improve and better target the local government responses. Communes had the responsibility of cleaning and sterilising the streets and main arteries, and ensuring compliance with the prohibition rules and the sanitary protocols. In addition, volunteer subcommittees were formed in some municipalities to locally control the pandemic (e.g. postponing local events), under the supervision of the relevant municipalities.

Tunisian authorities also activated the National Committee and local crisis committees. The aim of local crisis committees is to deal with the impact of COVID-19 on highly localised priorities that have arisen during the pandemic. They were created by individual municipalities and are usually composed of the main community actors, including the president of the municipal council, presidents of municipal council commissions (e.g. Health, Social Affairs and Environment), representatives from local civil society organisations and representatives from the Regional Social Affairs Administration.

EMERGENCY MEASURES TO COPE WITH THE CRISIS AT THE DIFFERENT LEVELS OF GOVERNMENT: Under the supervision of the Ministry of Finance, the Tunisian Government created the COVID-19 Solidarity Fund 1818, to alliviate the pandemic’s economic impact. Due to voluntary contributions from citizens and businesses, the government was able to collect more than TND 200 million, equivalent to USD 69.14 million. Furthermore, the government took several measures to adress the economic crisis, including: i) delay social contributions, ii) defer particular taxes, iii) enlarge benefits to unemployed workers and workers who earn less than 1000 Tunisian dinars per month, and iv) provide payement loans for small businesses.

Besides, during the pandemic, the CCL and the recovery plan came together to link local development with the needs of often marginalised and excluded categories from local development projects, such as women. As an example, Article 107 allows local authorities to provide direct or indirect aid (loans, donations, land availability etc.) to economic institutions located in the relative territorial area. This financing system is supported by the principle of solidarity, which presupposes a redistribution of aid from the "solidarity equalisation fund".

IMPACTS OF THE CRISIS ON SUBNATIONAL GOVERNMENT FINANCE: Overall, the percentage of change in subnational total expenditure between 2019 and 2020 was equivalent to a decrease of 11%. This includes a drop of 19% in subsidies and current transfers and 11% in intermediate consumption. Staff compensation, however, increased by 7%. On the other hand, subnational government capital expenditure witnessed the largest drops, with capital transfers and direct investment decreasing by 33% and 21% respectively.

The circular of the Minister of Local Affairs n 13 published in June 2020, aims to limit the financial impacts resulting from the exceptional measures to combat the spread of COVID-19. In fact, the Minister of Local Affairs called on municipalities by application of Article 177 of the CCL to review their current budgets and to reformulate their priorities by reducing their expenditure in order to avoid a budget deficit which would hinder the realisation of local development projects.

ECONOMIC AND SOCIAL STIMULUS PLANS: On 19 May 2020, Tunisia adopted the Government Decree N 2020-315, on the functional mobility of public officials for the benefit of local authorities, which aims to foster the redeployment of public officials for the benefit of municipalities according to their COVID-19 management needs. The recovery plan refers to this aspect as a fundamental element of the new post-COVID governance.

Moreover, on 30 June 2020, the Law n 2020-30 was adopted, relative to the social and solidarity economy. The goal of this new development model is oriented towards justice, restructuring the unorganised economy, achievement of economic well-being and quality of life to improve living conditions in view of sustainable development. The recent adoption of this law represented an opportunity as well as a tool for COVID-19 recovery, including at the local level through the financial and fiscal support granted to social and solidarity economy companies and organisations.