The Tunisian government has been given a B2 negative rating for its sovereign credit profile by rating agency Moody’s.
The annual credit analysis highlighted a number of credit challenges facing Tunisia including structural deterioration in its fiscal strength.
This deterioration was typified by the sharp increase in its debt ratio which rose from almost 10%, from 70.4% of GDP in 2017 to 77% in 2018. The situation has been exacerbated by exchange rate depreciation and a heavy public sector wage bill, equivalent to 14% of GDP and 53% of total revenues.
Some credit strengths were also referenced in the report, namely a nascent economic recovery driven by tourism, agriculture and manufacturing, and Moody’s has forecast annual growth of 2.3% in 2019 and 2.6% in 2020.
Evidence of a sustained reduction in external and fiscal imbalances and a stabilisation in foreign exchange reserves would support a change in outlook to stable, states the report. However, a delay or increase in the cost of external funding and an incomplete implementation of the economic reform agreed with the International Monetary Fund, could lead to a downgrade.
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