Fitch Ratings has downgraded Tunisia’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘B’ from ‘B+’. The Outlook is Stable.
The downgrade reflects the aggravation in Tunisia’s persistent macroeconomic imbalances and deterioration in external and public debt trajectories due to economic disruptions from the coronavirus pandemic shock.
Tunisia’s economy will witness its sharpest contraction on record in 2020 while the current account deficit (CAD) will fail to narrow amid a temporary halt in fiscal consolidation, prompting a further significant rise in net external debt (NXD) and general government (GG) debt ratios from already high levels.
The Stable Outlook balances continued strong support from official creditors against ongoing external vulnerability from large funding needs and risks to fiscal reforms from entrenched social tensions.