Japanese credit rating agency downgrades Tunisia's currency rate

By Adel Thabeti

TUNIS, Tunisia (AA) – A Japanese credit rating agency on Tuesday downgraded Tunisia's rating amid a deep economic crisis in the North African country.

In a statement, the Rating and Investment Information, Inc. (R&I) said Tunisia's foreign currency rate was reduced from B to B- with a negative outlook.

"Relatively high fiscal deficits persist. The outlook for fiscal consolidation is uncertain, and the government debt ratio remains high," R&I said.

The rating agency said tax revenue is increasing steadily and the growth of wage expenditure is under control, but there is an upside risk about expenditure for subsidies.

It warned that it would “downgrade the rating if concerns about the sustainability of government debt grow further."

"R&I believes that the IMF [International Monetary Fund] support is a crucial factor not only to secure foreign currency liquidity but to achieve macroeconomic stability and boost economic growth through structural reforms," the agency said.

Negotiations between Tunisia and the IMF to obtain a $1.9 billion loan over four years have stalled since October 2022.

In June, the global credit ratings agency Fitch also downgraded Tunisia from CCC+ to CCC- amid a severe economic crisis.

Tunisia has been in the throes of a deep political crisis that aggravated the country's economic problems since 2021.

* Writing by Ahmed Asmar