Moody’s Cuts Tunisia’s Rating To Ba2, Cites Political Instability

Moody’s Investors Service on Wednesday cut Tunisia’s sovereign credit rating to Ba2, citing political uncertainty and the risk of instability as well as weak finances at government-owned banks and sizeable external pressures on its balance of payments.

In a sign of potentially more downgrades to come, Moody’s assigned a negative outlook to the sub-investment-grade credit.

“Although tensions have declined since the assassination of politician Chokri Belaid and the collapse of Prime Minister Hamadi Jebali’s interim government in February, the risk of a further escalation in political instability remains high,” Moody’s said in a statement.

Tunisia was the first country to stage an “Arab Spring” uprising, inspiring similar revolutions in Egypt and Libya.

The new government is led by a moderate Islamist party, Ennahda, but hardline Islamist Salafists are seeking a broader role for religion, alarming a secular elite which fears this could undermine individual freedoms, women’s rights and democracy.

Standard & Poor’s rates Tunisia one notch lower at BB-minus with a negative outlook while Fitch Ratings has the North African nation one notch higher at BB-plus with a negative outlook.

Reuters