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HomeEconomyFitch downgrades Tunisia's credit rating due to doubts about its debt default

Fitch downgrades Tunisia’s credit rating due to doubts about its debt default


On Friday, Fitch Ratings announced a downgrade of Tunisia’s rating, in light of the uncertainty related to the country’s ability to raise sufficient financing to meet its financial needs. The agency expects the country’s gross domestic product growth to slow to 1.4 percent in 2023 from 2.4 percent in 2022.

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Fitch Ratings agency revised Friday’s credit rating Tunisia To CCC- from CCC+ due to suspected sovereign debt default by the authorities.

The agency said this reflects the postponement of a $1.9 billion financial rescue package provided by the International Monetary Fund after talks between the two sides stalled.

Central bank data this week revealed that Tunisia’s foreign exchange reserves fell to 21 billion dinars ($6.78 billion), enough to cover imports for only 91 days, compared to 123 days in the same period a year ago.

“Our baseline scenario is that an agreement between Tunisia and the International Monetary Fund (IMF) will be reached by the end of the year, but this is a much later date than previously expected and risks remain high,” Fitch said in a statement.

But in the absence of an agreement with the International Monetary Fund, Fitch believes that Tunisia could obtain external financing worth $ 2.5 billion in 2023, mostly from Algeria and the African Export-Import Bank (Afrixim Bank), project loans from multilateral partners, and increase grants from bilateral partners.

Fitch said it expects gross domestic product growth to slow to 1.4% in 2023 from 2.4% in 2022.

France 24/Reuters

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