R&I affirms Tunisia’s sovereign rating with outlook revised from negative to stable

Department of Research, Studies and International News 27-08-2025

The Japanese rating agency Rating and Investment Information (R&I) has just announced that it has revised Tunisia’s rating outlook (foreign currency issuer rating) from Negative (B-) to Stable.

According to the rating agency, “the Tunisian economy has been recovering. The current account deficit has narrowed, and foreign exchange reserves have increased. Concerns on foreign currency liquidity have receded, despite the absence of a clear prospect of receiving financial support from the International Monetary Fund.”

R&I justified this upgrade by citing the decrease in the budget deficit as a percentage of the Gross Domestic Product (GDP) and the “moderate” reduction in the public debt ratio, explaining that “the government has committed to restoring its budgetary situation.”

R&I takes the view that uncertainty regarding debt repayments is abating.

Based on these factors, along with the political stability maintained after the presidential election without major turmoil, R&I has affirmed the Foreign Currency Issuer Rating at B- and changed the Rating Outlook back to Stable.

In 2024, real GDP grew by 1.4%. The economic recovery was driven by the normalization of weather conditions that had dragged down the economy in the previous year, as well as by robust tourism demand.“With the solid economic performance continuing into 2025, full-year growth is expected to be in the mid to high one percent range,” the Japanese rating agency pointed out.

Impact of US tariffs deemed “limited”

It believed that given the small share of exports to the U.S., direct impacts of reciprocal tariffs would be limited.However, it recommends paying attention to indirect impacts thatTunisia may suffer depending on the economic trend in Europe, the major export destination for the country.

“If agricultural production and tourism expand steadily, the Tunisian economy will likely grow in the mid to high one percent range in 2026 and afterwards, though it is also dependent on external demand and the domestic political situation.”

In the past few years, the service balance surplus has widened, supported by higher tourism revenues. With the primary income balance also remaining in surplus thanks to remittances from Tunisians working abroad, the current account deficit has been narrowing as a share of GDP. In 2024, the deficit was 1.7% of GDP.

Going forward, the current account balance is projected to be a deficit of 2-3% of GDP, reflecting an increase in imports of energy, intermediate goods and consumer goods driven by stronger economic activity.With the wage bill for public servants and subsidies accounting for a large proportion of

government expenditures, there is little room for capital expenditures and other spending that help strengthen economic fundamentals.

Budget deficit reduced to 6% (of GDP)

While striving to secure tax revenues, the government has been working to curb spending, particularly on public servants’ salaries, reducing the fiscal deficit to 6.0% of GDP in 2024.In the 2025 budget, the government plans to contain the fiscal deficit at 5.5% of GDP. Given the energy prices that have been relatively stable, a surge in subsidy spending would be avoided.

The fiscal balance is highly likely to continue improving for the coming year or two, in R&I’s view.It should be recalled that on August 29, 2023, R&I downgraded Tunisia’s sovereign rating from “B” to “B-” while maintaining a “Negative” outlook.

This decision was justified by the difficult fiscal and external situation, reflected in the persistence of a budget deficit and a relatively high level of public debt, combined with uncertain prospects for fiscal consolidation.