tunisia credit report
13 pages
Published by
ouissem
Copyright :
All rights reserved
Sovereigns
16 August 2007
www.
fitchratings.
com
Ratings
Foreign Currency
Long-Term IDR* .
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BBB
Short-Term IDR*.
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[More]
Sovereigns
16 August 2007
www.
fitchratings.
com
Ratings
Foreign Currency
Long-Term IDR* .
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BBB
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F2
Outlook.
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Stable
Local Currency
Long-Term IDR* .
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ARating Outlook.
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Stable
Country Ceiling.
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BBB+
* IDR – Issuer Default Rating
Peer Group
BBB+ Hungary
Russia
South Africa
Thailand
BBB Tunisia
Aruba
Bulgaria
Kazakhstan
Mexico
Romania
BBB- Croatia
India
Morocco
Namibia
Ratings History
Date LTFC LTLC
24 May 2001 BBB A26 Sep 1996 BBB- A14 Sep 1995 BBBAnalysts
Eric Paget Blanc
+33 1 44 29 91 33
eric.
pagetblanc@fitchratings.
com
Eral Yilmaz
+44 20 7862 4154
eral.
yilmaz@fitchratings.
com
! Summary
The receipts of Tunisia’s largest ever privatisation, of Tunisie
Telecom, allowed the state to reduce indebtedness sharply in 2006.
The budget outturn was also better than expected, with the deficit
down slightly to 3.
0% of GDP.
This reflects a favourable
economic environment: real GDP grew by 5.
4%, driven by
sustained growth in manufacturing and services and supported by
efforts to reorient industry towards higher-value-added goods and
services.
Tunisian banks have been strengthened and their
performance has improved as a result of the efforts of the central
bank, Banque Centrale de Tunisie (BCT), to restructure and
modernise the financial system, one of Tunisia’s main credit
weaknesses.
Despite these improvements, however, public debt of
54.
0% of GDP and net external debt of 57.
9% of current external
receipts (CXR) are still higher than ‘BBB’ medians.
The current account deficit, after narrowing to only 1.
0% of GDP
in 2005, returned to a more normal level of 2.
1% in 2006.
This
was due to the rise in energy prices and higher imports of services
and capital goods resulting from increasing FDI.
Exports of
manufactured goods, especially electrical and mechanical
industries, tourism receipts, and remittances from expatriate
workers continued to grow fast.
Reserves rose sharply and
international liquidity is now nearer the ‘BBB’ median.
! Credit Outlook
Fitch Ratings expects the economy to grow at around 6% in 2007,
which should allow a modest reduction in the budget deficit.
Upcoming privatisations, though not of the same magnitude as in
2006, will help the debt reduction effort, albeit at a slower pace.
External debt should decline more rapidly, as the state increasingly
issues on the local debt market, taking advantage of the deepening
of Tunisian financial markets.
Despite the dynamism of Tunisian
exports, Fitch does not expect the current account deficit to narrow,
as high energy prices and growing services and equipment needs
will make it difficult to curb imports.
The opening of the Tunisian market is a potential medium- to
long-term threat for local firms, which could result in a
deterioration of the current account.
Remaining trade barriers for
EU exports will be lifted in 2008 and negotiations will start in
2007 to open the highly protected Tunisian services market.
! Strengths
! Stable political, policy and macroeconomic environment
! Gradual reduction in public and external indebtedness
! Efforts to liberalise the economy, albeit gradually
! Weaknesses
! Banking system remains weak, despite recent improvements
! High public and external indebtedness compared with peers
International
Credit Analysis
Republic of Tunisia
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