Moody’s Investors Service on Thursday said it downgraded Tunisia’s sovereign rating from Baa3 to Ba1, citing the country’s grave political crisis and its deteriorating credit fundamentals.
It put the rating on review for a possible further downgrade.
“The main driver … is the increase in political risk” following the February 6 assassination of opposition figure Chokri Belaid and the subsequent collapse of Hamadi Jebali’s government, it said.
“In particular, the failure to form a technocratic government to speed up the country’s democratic transition — as advised by the country’s outgoing government — highlighted the deep divisions within the ruling coalition …
“Moody’s highlights the growing polarization and divide within the coalition itself and between the coalition and opposition parties.”
Coupled with that have been “further delays in adopting the new constitution and organizing elections, which are prerequisites for any sustainable economic recovery,” Moody’s said.
It also pointed to the “continued deterioration in Tunisia’s credit fundamentals” since its 2011 revolution.
Moody’s said it expected the debt/GDP ratio, which had already risen to 40.8 percent of GDP at the end of 2010, to climb as high as 49 percent at the end of 2013.
“So far, the administration has been able to finance twin deficits at low costs thanks to the strong support of the international community. However, the deterioration in its credit fundamentals leaves the country more vulnerable.”
