HomeNewsTunisia: fiscal deficit amounts to 10.1% of GDP in 2020 (Moody’s)

Tunisia: fiscal deficit amounts to 10.1% of GDP in 2020 (Moody’s)

Moody’s announced in its recent rating action on Tunisia that the fiscal deficit widened to 10.1% of GDP in 2020, slightly narrower than the revised budget at 11.5%, against 3.5% in 2019.

Looking forward, Moody’s expects a gradual fiscal consolidation to 7.7% of GDP this year and to 6.2% in 2022, primarily as a result of spending reductions geared toward energy subsidy reform as the main spending adjustment variable in the short term.

Moreover, taking into account an expected economic expansion by 4% this year, followed by a return to growth of 2-3% thereafter, Moody’s expects the debt/GDP ratio to increase to almost 90% of GDP this year from the estimated 84.7% in 2020 and 72.3% in 2019, edging slightly higher in the next few years.

The U.S. credit rating agency indicates that higher fiscal deficits and a more onerous commercial debt service calendar with maturities at over $1 billion in 2021 and 2024 point to sizeable, albeit not exceptionally large, gross financing needs around 15-17% of GDP from about 10% of GDP before the pandemic.

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