The credit rating agency, “Moody’s”, lowered Tunisia’s sovereign rating to the level of high-risk countries, which constituted a shock among the economic circles, while the country is close to resorting to the Paris Club due to the escalating risks of debt default, and the increasing need to provide liquidity and manage urgent expenses for the state. Tunisia’s rating fell to Caa1 while maintaining negative prospects. The agency also announced the reduction of long-term sovereign issuances in foreign currency and the Tunisian dinar, and the reduction also included the classification of the Central Bank of Tunisia as a guarantee for the redemption of all sovereign bonds issued by the government.
The agency said that this reduction reflects weak governance and increased risks in relation to the government’s ability to take measures that would ensure the country’s access to new funds to meet the growing financial needs over the next few years. Moody’s also placed Tunisia among the group of countries that complain of financial distress, such as El Salvador, Iraq, Ethiopia, Mali and Sri Lanka.
A member of the Arab Institute of Enterprise Heads, Nafie El-Nifer, said that the classification reached by Tunisia is an inevitable result of the delay in economic reforms and the absence of political courage for rulers over the past ten years, despite the fact that economic dealers have been ringing alarm bells for some time.
In a statement to Al-Araby Al-Jadeed, Al-Nifer stressed that the incompetence and boldness of the ruling political class dragged the country into the worst ratings and put Tunisia under high financial pressure, expressing his fears of the harsh repercussions of the rating on the economy.
He considered that Moody’s rating is a harsh response to the intransigence and the failure to pay any attention to the issue of time and the positions of the financial partners, warning of the danger of continuing the policy of escaping forward to cover failure at a time when the country is about to reach the abyss.
Days before Moody’s downgraded Tunisia, Tunisian President Kais Saied said that the country would not be in the position of a student to the rating institutions, and that Tunisia had sovereignty that would defend it, criticizing the talk about ratings pressures and risks to the country. In a video posted on the presidency’s page, Saeed also described rating agencies as “Umk Sanafa”, a woman skilled in the art of cooking in the local dialect.
Tunisia’s new negative classification comes a few days after the formation of Najla Bouden’s government, which was sworn in last Monday. The Prime Minister began her duties with the economic file with a meeting with Minister of Finance Siham Al-Boughdiri and Central Bank Governor Marwan Al-Abbasi in order to discuss solutions to the budget deficit and find solutions to provide $9 billion to continue managing expenditures for the remainder of the year.
Financial expert Mohsen Hassan stressed that Tunisia has become a high-risk country under the new classification, considering that Tunisia’s exit to the global financial market to borrow is not currently possible with very high interest rates of up to 15 percent. In a statement to Al-Araby Al-Jadeed, he added that Tunisia is still in need of external funding, calling for contacting all parties and international donors to search for assistance mechanisms.