Fitch Upgrades Tunisia’s Credit Rating to “B-” with Stable Outlook

Fitch Ratings on Friday upgraded Tunisia’s long-term foreign and local currency issuer default ratings from “CCC+” to “B-”, assigning a stable outlook.

The agency said the upgrade reflects Tunisia’s “continued improvement in its external position, supported by a narrowing current account deficit, resilient net foreign direct investment (FDI), and sustained disbursements from bilateral and multilateral partners, all of which are bolstering international reserves and maintaining adequate external liquidity.”

At the same time, Fitch cautioned that Tunisia’s credit profile remains constrained by limited access to external financing, given its absence from international markets since 2021, as well as heightened exposure to commodity price shocks and the lack of subsidy reform.

The current account deficit is projected to widen to 2.2% of GDP in 2025 and 2.8% in 2027, up from 1.5% in 2024, mainly due to lower olive oil export revenues and higher goods imports.

FDI inflows are expected to rebound in 2025, with continued support from multilateral and bilateral partners through 2027.

Tunisia has lacked market access since 2021 and has no IMF program in place. However, official disbursements from partners, equal to 2.2% of GDP in 2024, have remained resilient.

Foreign reserves are forecast to fall to 3.9 months of current external payments by 2027, from 4.5 months in 2024, but will remain sufficient to cover declining external debt service.

Net external financing outflows are expected to shrink from a record 3.7% of GDP in 2024 to 1% by 2027, aided by falling debt repayments and flexible funding sources.

Public debt is projected to stay elevated, at 83% of GDP in 2025, compared with 84.5% in 2024. The small decline is largely attributed to a weaker U.S. dollar against the Tunisian dinar.

The budget remains rigid and vulnerable to external shocks, with no major fiscal reforms expected. Wages, interest payments, and subsidies are set to absorb 93% of revenues (excluding grants) by 2027.

Banks’ exposure to the public sector, already at around 20% of total assets, is likely to increase, requiring central bank refinancing. State-owned banks are expected to bear a larger financing burden as private banks adopt a more cautious stance.