With large debt repayments due soon, Tunisia is facing the threat of sovereign default unless the government agrees to devalue the currency and embark on a large fiscal consolidation, meeting the conditions of a prospective IMF deal, Capital Economics said. “Without these funds, the threat of a disorderly sovereign default will grow – upcoming large sovereign Eurobond repayments in Q4 2023 and Q1 2024 could prove to be crunch points,” the London-based think tank said. In October 2022, the Tunisian government had signed a staff-level agreement with the IMF to receive a $1.9 billion loan. In June, Fitch Ratings downgraded Tunisia's long-term foreign sovereign credit rating further to CCC- from CCC+. “Not only is the public debt ratio high, but the composition is concerning – around 37% of the debt is denominated in foreign currency,” Capital Economics said.

Source: The North Africa Journal July 07, 2023 05:34 UTC