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Moody's downgrades Tunisia’s credit rating

Moody's downgrades Tunisia’s credit rating
The ratings agency also maintained the negative outlook

Mubasher: Moody's Investors Service has downgraded the long-term issuer rating of the government of Tunisia to B1 from Ba3 and maintained the negative outlook, according to a recent report.

The ratings agency has also downgraded the foreign currency debt rating of the Central Bank of Tunisia to B1 from Ba3 and maintained the negative outlook,

The key drivers for the downgrade to B1 are the continued structural deterioration in Tunisia's fiscal strength, the Persistent external imbalances, and the reduced institutional strength and government effectiveness as highlighted by the track record of delays in the agreed reform implementation program with the International Monetary Fund (IMF).

“The negative outlook reflects the risk of a more sustained than anticipated decline in foreign exchange reserves with concomitant depreciation pressures which could fuel adverse public debt dynamics.”

“It also takes into account Tunisia's increasing funding requirements in view of upcoming international bond redemptions starting 2019 amid reduced visibility about access to external funding sources, in addition to rising contingent liability exposures to the public banking sector, to the pension system and with respect to state-owned enterprises (SOEs),” the report explained.