By Christine Lagarde

(Version in عربي)

Tunisia, the spark that ignited the Arab Spring, was where I spent the past two days. I held official meetings with the new leaders of the country. They spoke about the Freedom and Dignity Revolution, as the Tunisians call it, and of their concerns to ensure a smooth transition to democracy and prosperity.

One year on, it is still extraordinary to think how this dramatic transformation by a grassroots movement has migrated to other countries across the Middle East and North Africa.

Alongside my official visits, I particularly enjoyed a lunch I had with a small group of women, entrepreneurs, professors, and youth activists who spoke passionately about their lives, their commitment, and their hopes for their country.

Since I was appointed head of the International Monetary Fund last July, I have set about visiting all major regions of the world to hear the concerns of our members and understand the issues faced by different countries. Tunisia is the first Arab country I am visiting. I am also going to Saudi Arabia.

Lighting the path ahead

Tunisia is going through an inclusive process of transition, but faces some extraordinary challenges. I have heard from its leaders how Tunisia was the model that paved the way for the Arab Spring, and their firm belief that it remains capable of lighting the path forward for other countries going through historic changes in the region.

I listened carefully to their leaders and to the women. One cannot but respect the determination and passion with which both leaders and people want to make this historic transformation succeed.

In all revolutions, a period of unease and impatience inevitably follows the initial heady successes. The turbulent world economy has added an extra dimension of uncertainty to an already difficult year.

Youth bearing the brunt

I told Tunisian CEOs and representatives of the banking sector that Tunisia faces deteriorating public finances, a widening current account deficit, and lingering problems in the banking sector, and there is widespread anxiety about the cost of living and trade.

The upheavals of the past year have given renewed urgency to the need to counter chronic joblessness, particularly among the young people. Unemployment in Tunisia has risen sharply from an already high base. It is now estimated at 18 percent, with youth unemployment at over 40 percent. We must remember that economic development is not an end by itself; it is only a means to enrich peoples’ lives.  And nothing enriches like gainful employment. It is also a source of dignity, mobility, and hope.

The government and private sector must work in harmony to boost investment, productivity, and create jobs. Tunisia, unfortunately, is facing additional challenges stemming from the looming debt crisis in the Euro zone.

Challenges in year ahead

The key challenges for the coming year will be to ensure social cohesion while maintaining macroeconomic stability. To that end, ensuring adequate financing is a top priority. Capital markets will likely provide only a small part of these funds – and at a higher cost. So, regional partners and the broader international community will also be called upon to provide financial support. The IMF is ready to do its part.

The road ahead will be long and demanding, but I remain hopeful. The country that is so famous for its diversity and love for freedom, will succeed in overcoming the hardships.

The magnificent ceramics that shroud the buildings of the capital Tunis, the mosaics that go back hundreds of years and that have survived wars and conflicts are but a reflection of that diverse culture that must be preserved and respected. This is an image I will take with me from Tunis, together with the strength of my Tunisian women friends!