Five years after Saied’s power grab, Tunisia’s old grievances resurface

Tunisia marks five years since President Kais Saied suspended parliament and began ruling by decree, with persistent economic pain including 17.4% unemployment (World Bank, end-2020), rising prices, medicine shortages, and widespread electricity and water outages. Extreme heat near 50°C (up to 49.8°C) drove record electricity demand and rotating power cuts that disrupted water-pumping stations, reinforcing a squeeze on purchasing power. Human-rights groups say opposition has faced a crackdown, highlighted by Tunisia courts sentencing 37 defendants in April 2025 and upholding convictions for 34 in an appeals ruling in November 2025, while the article flags a growing overlap between economic grievances and political dissent.

Analysis

This is not an equity story so much as a sovereign-financing trap. When a government concentrates power without improving utilities, the market eventually prices a higher probability of ad hoc controls, arrears, and external funding delays; that shows up first in eurobond spreads and FX availability, not in broad EM benchmarks. The immediate reaction can stay muted because Tunisia is small, but the 1-3 month risk is that worsening service failures make reform politically impossible, which raises the probability of an IMF stall or bilateral support fatigue.

The second-order losers are state-linked banks, utilities, and any importer-dependent business that needs steady FX and working capital. Tourism and airlines are a more important downstream channel than the protests themselves: once households are queuing for essentials, the country’s operational reliability gets questioned, which can hit bookings and push local demand into the informal economy. The more central issue is circularity: shortages increase anger, anger reduces policy flexibility, and reduced flexibility deepens shortages.

The contrarian view is that investors may be underestimating how quickly a “political risk” episode can become a balance-of-payments event. The consensus may dismiss Tunisia as untradeable and therefore harmless, but the catalyst is a missed external financing step, not headline risk. The thesis is falsified if there is a credible IMF/bilateral package, reserve stabilization, and visible improvement in electricity/water continuity over the next 1-2 quarters.

Key Decisions for Investors

• No immediate equity trade on the headline; keep Tunisia risk flat and avoid forcing exposure via broad frontier/EM ETFs over the next 2-4 weeks.
• If we have access to sovereign debt or CDS, use any relief rally to short Tunisia external bonds / buy protection on 1-3 month horizon; exit if an IMF agreement or bilateral bridge financing is announced.
• Watch for a deteriorating reserve trajectory or another round of utility rationing as the key falsifier/entry trigger; those are more important than protest counts.
• Do not use RVMD as a proxy here; the linkage is absent. Only consider broader frontier debt vehicles like FM/EMB if there is evidence of spillover beyond Tunisia.