Fitch Ammends its Outlook of Tunisia from Stable to Negative

  • Tunis, Republic of Tunisia
  • 24 November 2020
1

Fitch Ratings Agency amended its view of Tunisia from stable to negative, while maintaining its credit rating at "B", i.e. at the level of risk.

According to the agency, the negative expectations reflect the exacerbation of financial liquidity risks and the sharp deterioration in public finances and the macroeconomic environment, resulting from the shock of the Coronavirus pandemic. Fitch expects the central government's deficit to widen to 10.5 percent of GDP in 2020, from 3.3 percent in 2019, in line with the goal of the supplementary budget project.

Fitch revealed that the unannounced accumulation of government arrears indicates the existence of a large share of off-budget spending by state-owned companies, highlighting the deterioration of public financial management and possibly the lack of financial liquidity. Arrears amount to 8 billion Tunisian dinars ($2.85 billion), accounting for 7.2 percent of GDP for 2020.

The agency expects that Tunisia will cover its financing needs during the period 2020-2022 through support for official creditors, local market issues and central bank financing. According to the agency, the recovery of the country's foreign reserves to $8.4 billion at the end of October, from $5.4 billion in mid-2019, supports the government's external debt service ability.

Source (Al-Araby Al-Jadeed Newspaper, Edited)