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Tunisia's new premier faces first challenge with austerity plan

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Tunisia has taken its first step in implementing an economic austerity program -- a move that will mean more belt-tightening for a country that is already economically depressed. Prime Minister Rashid Sfar announced yesterday an immediate 10 percent devaluation of the Tunisian currency. The action will effectively freeze a standard of living which for most Tunisians has not improved since early 1984. Selling the austerity measures to his fellow countrymen will present the new prime minister -- in office only since last month -- with his first major policy challenge.

Last month, President Habib Bourguiba sacked Prime Minister Mohammed Mzali, who had long been his closest aide and who was expected to succeed the elderly ruler. Despite President Bourguiba's earlier words of confidence in Mr. Mzali's ability to run the country one day, the sacking showed that the former prime minister had lost his credibility, analysts say. It also helped the President distance himself from failed policies he once supported.

In the wake of riots in January 1984, resulting from a decision by the President and backed by Mr. Mzali to double the price of bread, Mzali's powers were reduced by two factors:

The appointment last spring of Gen. Zine El Abidine Ben Ali to run the Ministry of the Interior -- a portfolio that Mzali had held since the bread riots.

The prime minister's loss of ground on economic policy. Ever since the bread riots, Minister of Planning Ismail Khelil had been urging a package of austerity and reforms, only to be rebuffed by Mzali.

However, Tunisia's plunging oil income (40 percent of all foreign receipts), declining tourism dollars, and lack of rain leading to a disastrous crop aided Mr. Khelil in his bid to convince Bourguiba that strong economic measures were needed.

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