[Politics] Fitch: political instability in Tunisia creates uncertainty

[MosterOfficial ☆]

 

The risk rating agency Fitch Ratings warned today that Tunisian President Kais Said's initiative to dismiss the head of government and temporarily suspend Parliament could hamper negotiations with the International Monetary Fund (IMF) and deter its Western partners. to continue supporting the country. "The latest decisions of the President of the Republic raise new political uncertainties, however, we believe that it is unlikely that he will use his powers to push forward difficult measures, such as cuts in the large wage bill of the public sector - which in 2020 represented 17% of the GDP- because it would be unpo[CENSORED]r and could generate social pressure against it, "Fitch explained in a press release. The finance corporation lamented that prospects for reforms to reduce the budget deficit, stabilize debt and limit external pressures on liquidity were already low before the current political crisis, although it noted that Europe's concerns about clandestine migration "will remain. an important motivation for external support. " The fragile coalition in parliament, tensions between key political leaders and entrenched social and union opposition against fiscal consolidation measures have complicated efforts to maintain fiscal soundness and IMF support, he explained.

 

In the absence of solid reforms and international support, financial pressures will continue to increase, warned Fitch, which already downgraded the country's rating to "B" this month with a negative outlook. Although Tunisia plans to receive support from public creditors, equivalent to 4.7% of GDP, and access the Eurobond market to obtain funds worth 2.2% of GDP, these objectives are "unrealistic" so the government it will continue to depend on local finances. Creditors could consider debt restructuring through the Paris Club, an informal body made up of creditor states, with possible repercussions for private creditors but would be reluctant to accept a debt reduction without reforms to address the high budget deficit , he pointed. It also revealed that its current foreign exchange reserves stand at 8.9 billion dollars this July compared to 9.8 billion at the end of the year. With its system on the brink of bankruptcy, whose public debt reaches a dizzying record of 30,000 million euros, the Maghreb country is in full negotiation with the IMF for a new loan - the fourth during the last decade - of 3,300 million euros, before making the leap to the international market to try to mobilize another 3,200 million. Added to the economic and social crisis is political instability. President Kais Said announced yesterday the dismissal of the head of Government and the suspension of the Assembly for 30 days as well as the withdrawal of the parliamentary immunity of all the deputies "to regain social peace and save the State", a decision that the majority of Political forces, as well as legal experts, describe it as a "coup d'état".

 

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