Tunisian Risks to Macroeconomic Stability Increase – IMF says

TUNIS (Capital Markets in Africa) – The International Monetary Fund considered that Tunisian authorities remain committed to the implementation of urgent economic reforms to reduce the country’s macroeconomic and fiscal imbalances. It indicated that the economy showed signs of recovery, with real GDP growing by 2.5% in the first quarter of 2018, its highest level since 2014, supported by strong agricultural production and exports.

Also, it noted that the current account deficit narrowed because of a more flexible exchange rate, while foreign direct investments recovered in the covered quarter. Still, the Fund considered that risks to the country’s macroeconomic stability are more pronounced. It noted that the annual inflation rate reached 7.7% in April 2018, its highest level since 1991. It added that the country’s external environment has become less favourable in recent months amid higher global oil prices and greater risk aversion in global financial markets. As such, it called on authorities to adopt significant measures to reduce inflation and narrow the fiscal deficit.

In parallel, Fitch Ratings affirmed at ‘B+’ Tunisia’s long-term foreign currency issuer default rating and revised the outlook on the rating from ‘stable’ to ‘negative’. It attributed the outlook revision to rising pressure on the country’s external account, as well as higher uncertainties about the authorities’ ability to reduce macroeconomic imbalances amid political and social tensions.