Moody's upgrades Tunisia's outlook from negative to stable
15/02/2020 10:31, TUNIS/Tunisia

(TAP) – Moody’s upgraded Tunisia’s outlook from negative to stable, all while affirming its B2 rating, the Central Bank of Tunisia (BCT) announced late on Friday in a press release.

This upgrade, announced by Moody’s on Friday, is mainly due to the reduction of the current account deficit, the improvement of the foreign exchange reserve and the reduction of the public debt burden. “Such elements have significantly reduced the level of risk related to the macroeconomic stability,” the same source reported.

"The affirmation of the B2 rating reflects external vulnerability risk that remains elevated in light of large external financing needs, and a high debt burden still vulnerable to potential currency and financing shocks. It also takes into account the relative strength of Tunisia's institutions and governance and the potential for the economy to return to stronger growth rates, given a diversified economic base and educated labor force," Moody's said.

Conversely, a downgrade would be likely if there were delays in the availability, or a marked increase in the costs, of external funding, fiscal overruns or the materialisation of sizeable contingent liabilities, that would weaken Tunisia's fiscal strength and foreign exchange reserves adequacy. This could be the result of protracted policy paralysis or the inability to form a government that delays the implementation of outlined fiscal and business environment reforms, Moody's warned.

This decision came following an on-the-site review conducted by Moody’s in November 2019, during which it held meetings with the authorities, officials of the Tunisian General Labour Union (UGTT) and the Tunisian Confederation of Industry, Trade and Handicrafts (UTICA).

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