An overvalued dinar and a growing foreign debt sparked a foreign exchange crisis in the mid-1980s. In 1986, the government launched a structural adjustment program to liberalize prices, reduce tariffs, and reorient Tunisia toward a market economy.

Tunisia's economic reform program has been lauded as a model by international financial institutions. The government has liberalized prices, reduced tariffs, lowered debt-service-to-exports and debt-to-GDP ratios, and extended the average maturity of its $10 billion foreign debt. Structural adjustment brought additional lending from the World Bank and other Western creditors. In 1990, Tunisia acceded to the General Agreements on Tariffs and Trade (GATT) and is a member of the World Trade Organization (WTO).

In 1996 Tunisia entered into an "Association Agreement" with the European Union (EU), which will remove tariff and other trade barriers on most goods by 2008. In conjunction with the Association Agreement, the EU is assisting the Tunisian Government's Mise A Niveau (upgrading) program to enhance the productivity of Tunisian businesses and prepare for competition in the global marketplace.

The government has totally or partially privatized about 160 state-owned enterprises since the privatization program was launched in 1987. Although the program is supported by the UGTT, the government has had to move carefully to avoid mass firings. Unemployment continues to plague Tunisia's economy and is aggravated by a rapidly growing work force. An estimated 55% of the population is under the age of 25. Officially, 14.3% of the Tunisian work force is unemployed, but the real numbers of jobless or underemployed are higher.

In 1992, Tunisia reentered the private international capital market for the first time in 6 years, securing a $10-million line of credit for balance-of-payments support. In January 2003 Standard and Poor affirmed its investment grade credit ratings for Tunisia. The World Economic Forum ranked Tunisia 41st in the 2004 Global Competitiveness Index Ratings (one place behind South Africa, the continent's leader). In April 2002, Tunisia's first dollar-denominated sovereign bond issue since 1997 raised U.S.$458 million, with maturity in 2012. In June 2005 the central bank sold 400 million euros of 15-year bonds in Tunisiaís longest-dated euro deal.

The stock exchange is under the control of the state-run Financial Market Council and lists nearly 50 companies. The government offers substantial tax incentives to encourage companies to join the exchange, but expansion is still slow.

The Tunisian Government adopted a unified investment code in 1993 to attract foreign capital. More than 1,600 export-oriented joint venture firms operate in Tunisia to take advantage of relatively low labor costs and preferential access to nearby European markets. Economic links are closest with European countries, which dominate Tunisia's trade. Tunisia's currency, the dinar, is not traded outside Tunisia. However, partial convertibility exists for bonafide commercial and investment transaction. Certain restrictions still limit operations carried out by Tunisian residents.

In October 2002 the U.S. and Tunisia signed a Trade and Investment Framework Agreement (TIFA) designed to provide a forum for discussions on expanding trade and investment between the two countries. The first U.S.-Tunisia Council on Trade and Investment envisioned under the agreement took place in Washington, DC in October 2003, and the second in Tunis in June 2005. TIFAs can be the first step towards a Free Trade Agreement (FTA), and the Government of Tunisia has expressed interest in concluding an FTA with the United States at some point in the future.