Public Finance Dynamics in North Africa: A Comparative Assessment of Tunisia and Morocco's Growth Challenges

This study provides an extensive comparison of public finance management between Tunisia and Morocco, two North African nations with similar economic characteristics but different fiscal policies and outcomes. Using an extended time series spanning 2000-2024, the paper combines theoretical frameworks with robust empirical analysis, incorporating data from the World Bank, IMF, and national sources. The regression models control for institutional quality, FDI flows, trade openness, human capital indicators, and external shocks including the COVID-19 pandemic. Employing advanced econometric techniques including GMM estimation to address endogeneity concerns, the findings demonstrate that Morocco’s fiscal management shows significantly greater efficiency, contributing to its superior economic performance compared to Tunisia. Our results, contextualized within the broader MENA region literature, suggest that differences in tax policy effectiveness, expenditure quality, and debt management explain a substantial portion of the growth divergence. Comprehensive policy recommendations are offered to improve fiscal management in Tunisia, drawing lessons from Morocco’s experience while acknowledging the institutional and structural differences between the countries.