Cairo- Fitch Ratings has downgraded Tunisia’s long-term foreign and local currency issuer default ratings to ‘B+’ from ‘BB-’. The outlook is stable.
The agency explained this by “the collapse of tourism in the context of elevated security risks, slowdown in investment amid frequent government changes and episodes of strikes and social unrest that have weakened economic growth performance and prospects.”
Fitch estimates GDP growth for 2016 at 1.2%, compared with a pre-revolution long-term average of 4.5%, and versus medians of 4.0% for ‘B’ peers. Inflows from tourism continued to slow, though at a moderating pace (down 8% yoy in September, versus a 38% decline in H1 2016).
Fitch projects GDP growth of 2.3% in 2017 and 2.5% in 2018
Fitch’s estimate for the 2016 general government deficit of 6.4% of GDP and that the government will need to borrow the equivalent of 7% of GDP externally to meet its amortization and budget needs in 2017.