Tunisia is in talks with the United Arab Emirates and Saudi Arabia to bail out coffers drying up under the impact of a twin economic and political crisis, according to a central bank official quoted by local media.
In statements recently reported by two private radio stations, Mosaïque FM and Shems FM – and confirmed to AFP on Monday October 18 by an official at the Central Bank of Tunisia on condition of anonymity – Abdelkarim Lassoued is responsible for funding and payments from outsiders “advanced talks with Saudi Arabia and the Emirates to save state resources”, without specifying the amount of financial support to which the discussions relate or in what form it would be provided.
The Tunisian economy, which has been characterized by sluggish growth (0.6% per year on average) and high inflation (6% per year) for the past decade, has been hit hard by the Covid-19 pandemic, which has left the country paralyzed and devalued crucial assets tourism revenue.
Moody’s downgrades the country’s credit rating
The crisis was exacerbated by President Kaïs Saïed’s coup d’état, which, citing a “imminent danger” which threatened the country over a political impasse, took full power on July 25, sacking the government and suspending the Islamist-inspired Ennahda party-dominated parliament.
These measures, denounced as an authoritarian tendency by the opposition and NGOs, raise concerns in the international community about the sustainability of democracy in Tunisia, the cradle of the ‘Arab Spring’ in 2011. Mr Saïed received the support of the Emirates and Saudi Arabia. two countries on the front line in the fight against political Islam, whose emanation in Tunisia is Ennahda.
The governing board of the Central Bank of Tunisia expressed its concern in early October that “the acute drying up of external funding given the significant need to finalize the state budget for 2021”. In mid-October, rating agency Moody’s downgraded the country’s sovereign rating by one notch from B3 to CAA1, meaning confidence in Tunisia’s finances is dwindling. “If significant funding is not secured […] there is a risk of non-payment” of the country, warned Moody’s.
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