Tunisia is in talks with the United Arab Emirates and Saudi Arabia to bail out the state coffers, which are drying up under the impact of a double economic and political crisis, according to a central bank official cited by local media.
In remarks recently reported by two private radio stations, Mosaïque FM and Shems FM – and confirmed Monday, October 18 to AFP by an official of the Central Bank of Tunisia on condition of anonymity -, Abdelkarim Lassoued, in charge of financing and payments outside this institution, reported “Advanced discussions with Saudi Arabia and the Emirates to replenish the resources of the State”, without specifying the amount of financial assistance to which the discussions relate or in what form it would be allocated.
The Tunisian economy, characterized by growth at half mast for ten years (0.6% per year on average) and high inflation (6% per year), has been hit hard by the Covid-19 pandemic, which brought the country to a standstill and deprived it of crucial tourism revenue.
Moody’s downgrades the country’s rating
The crisis was aggravated by the coup by President Kaïs Saïed, who, citing a “Imminent danger” Threatening the country due to a political stalemate, seized full power on July 25 by sacking the government and suspending Parliament, dominated by the Islamist-inspired Ennahda party.
These measures, denounced by the opposition and NGOs as an authoritarian drift, raise concerns within the international community about the sustainability of democracy in Tunisia, cradle of the “Arab Spring” in 2011. Mr. Saïed received support the Emirates and Saudi Arabia, two countries on the front line in the fight against political Islam, of which Ennahda is the emanation in Tunisia.
The board of directors of the Central Bank of Tunisia expressed its concern in early October regarding “The acute drying up of external financial resources in the face of the significant needs to complete the State budget for the year 2021”. In mid-October, the rating agency Moody’s downgraded the country’s sovereign rating one notch, from B3 to CAA1, meaning that confidence in Tunisian finances is declining. “If significant funding is not secured […] there is a risk of default ” country, warned Moody’s.
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