The credit rating agency Standard & Poor's has warned of Tunisia's failure to pay off sovereign debt and its repercussions on the country's banking sector.
The agency revealed that Tunisia's default on sovereign debt payments, which is highly unlikely over the next 12 months, could cost banks up to $ 7.9 billion.
Tunisia began talks with the International Monetary Fund to obtain a financial aid package, due to its high debt and economic contraction of 8.8 percent last year.
Standard & Poor's indicated that Tunisian banks have more than doubled exposure to the country's sovereign debt in the past decade, in addition to a sharp increase in government debt, it warned that the cost of default for banks would equal 102 percent of the total equity of the banking system or 17.3 percent of the projected nominal GDP in 2021.
For months, Tunisia has been facing a worsening economic situation, and a decline in all development indicators, accompanied by escalating tensions between political decision centers, due to the ongoing ministerial transformation crisis. Vital sectors, especially the tourism sector, live in a quasi-recession due to the Corona pandemic, as 70 percent of hotels have suspended their activities and workers in them have been referred to technical or final unemployment.
Source (London-based Arab Newspaper, Edited)
