The existing state of the Tunisian economic situation as well as Moody’s outlook have been analyzed and made public by the US agency through a report published on June 29, 2020.
Moody’s would likely confirm the rating at the current B2 level if the review concluded with sufficient confidence that the coronavirus shock will not materially alter Tunisia’s debt trajectory and/or erode its recently restored foreign-exchange reserves buffer.
High confidence in the country’s ability to secure funding to meet upcoming debt service payments at affordable costs over the next few years could also support a confirmation at the current level, it specified.
The rating agency warned against high debt levels approaching 80% of GDP by 2023.
It also points to a history of fiscal deficits underpinned by a rigid spending structure, and large external imbalances.
Moody’s expects 4% growth in 2021 and a gradual improvement toward growth of 3% by the end of 2024.
Notwithstanding the temporary nature of the coronavirus shock, the growth outlook remains insufficient to significantly expand employment prospects, particularly for young graduates, increasing the risk of social discontent, it pointed out.
Moody’s insists on labor market and business environment reforms that incentivize non-energy foreign direct investment.
Tunisia’s current rating will be downgraded in the event of a significantly more severe deterioration in Tunisia’s fiscal and debt metrics.
High unemployment, pronounced regional disparities and social tensions that could reignite if the economic recovery expected later this year fails to materialize, continue to cloud the economic outlook.