Fitch downgrades Tunisia’s rating to CCC-

Fitch Ratings downgraded Tunisia’s credit rating from CCC+ to CCC- on Friday, amidst economic uncertainty and turmoil.

“The downgrade reflects uncertainty around Tunisia’s ability to mobilise sufficient funding to meet its large financing requirement, there are also increased signs that a default is probable because of the inability to obtain funding from the IMF and unlock associated official creditor financing,” Fitch stated.

Fitch is forecasting that government financing needs to reach 16 percent of gross domestic product (GDP) in 2023 and 14 percent of GDP in 2024. Tunisia’s foreign exchange reserves had decreased to $6.78 billion.

Tunisia had previously requested four billion dollars in funding from the International Monetary Fund (IMF) last year. Staff-level negotiations with the IMF resulted in a new 48-month Extended Fund Facility of $1.9 billion to support the government’s economic reform programme.

Fitch is also predicting that Tunisia might be able to get external financing from Algeria, the African Export-Import Bank (Afrixmebank), and project loans from multilateral partners of $2.5 billion in 2023.

Tunisia had announced that it would be receiving $500 million from the African Export-Import Bank to fund its 2023 budget and that it would be passing a law related to the loan.

Moody’s Investors Service had also downgraded Tunisia’s credit ratings in January, on the same basis of the country’s struggles to find financing to meet the government’s large funding requirements.