Fitch Ratings Agency has downgraded Tunisia’s long-term foreign currency, the Issuer Default Rating (IDR) to ‘BB+’ from ‘BBB-‘ and the Long-term local currency IDR to ‘BBB-‘ from ‘BBB’. The Outlooks on the IDRs are Negative.
The agency has also lowered Tunisia’s Country Ceiling to ‘BBB-‘ from ‘BBB’ and Short-term foreign currency IDR to ‘B’ from ‘F3’
The downgrade of Tunisia’s sovereign ratings by one notch reflects the agency’s view that the country’s economic and political transition is proving longer and more difficult than anticipated and downside risks around the process have therefore increased. In addition large twin budget and current account deficits are leading to deteriorating public and external debt ratios.
Social unrest and political tensions persist, adding to the uncertainty surrounding the political transition in the country. The legislative and presidential elections were postponed to June 2013 and could be again at the end of 2013. Transition periods and longer campaigns are not conducive to macroeconomic and could fuel social unrest, said Fitch.