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    Citing Violence and Political Instability, S&P Downgrades Tunisia’s Credit Rating

    By Robert Joyce | Aug 16 2013 Share on Linkedin Share on Facebook Share on Twitter Share on Google Share on pinterest Print

    Tags: Credit ,S&P ,standard & poor's ,terrorism ,Violence
    Tunisian currency. Image courtesy Flickr user Cyberslayer (Creative Commons)

    Tunisian currency. Image courtesy Flickr user Cyberslayer (Creative Commons)

    Standard and Poor’s (S&P) downgraded Tunisia’s foreign and domestic long-term credit rating on Friday, citing concerns about the country’s political crisis and security threats.

    The American financial services company known for its influential credit rating agency has dropped the country down two levels, from BB- to B. The lower rating can decrease the willingness of investors to buy Tunisian bonds.

    The move reflects the agency’s diminishing confidence in Tunisia’s political stability and the influence of external factors such as Europe’s economic health. [display_posts type="related" limit="3" position="right"]

    S&P also slashed its gross domestic product (GDP) per capita growth forecast for Tunisia from 2.8 percent to 1.4 percent. This attempts to measure the economic outcome of the country. The agency expects unemployment to remain above 15 percent for the next three years, negatively affecting its expectations for the economy’s growth.

    The rating is S&P’s evaluation of Tunisia’s ability to repay its foreign and local debt in full and on time. The B rating is considered “speculative grade” and means, according to the agency, that Tunisia currently has the ability to meet its financial obligations but faces adversities that could affect its ability to make payments.

    In a statement issued Friday explaining the rationale for the decision, S&P also cited “perceived increased terrorist risks” as a threat to tourism and investment.

    Demonstrations have rocked Tunisia since the assassination of opposition politician Mohamed Brahmi on July 25. Since then approximately one-third of the National Constituent Assembly has withdrawn and its speaker, Mustapha Ben Jaafar, has suspended the legislature’s work.

    The opposition demands the dissolution of the NCA and sitting government in favor of a council of technocrats to finish drafting the constitution and plan elections. The government welcomes the inclusion of opposition parties into the government, but has ruled out the NCA’s dissolution. [display_posts type="same_author" limit="3" position="right"]

    The political crisis, according to S&P, will delay much-needed reforms and in turn cause more public unrest. The agency cites the need for banking, investment law, and tax reforms as particularly relevant.

    The agency’s statement issued Friday mentions “regional terrorist groups,” a reference to the ongoing military action around Chaambi mountain near Algerian border following an attack which killed eight soldiers, as well as other events including two non-lethal explosions near Tunis.

    S&P called Tunisia’s outlook ‘negative,’ meaning that there is at least a one in three chance of a further degrade in the next year. The statement explained the agency’s belief that even if the two political sides are able to reach a compromise, the resulting government will face an increasingly polarized country and continued security threats.

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  • Updated: Tunisian Economy Continues to Decline Amid Wave of Violence
  • Comments

      mr /

      be careful what you wish for, as the grass is not always greener, this very old saying has much relevance with what is happening today, if you don’t continue the fight then I’m afraid that worse will happen to Tunisia’s way or life, it’s your choice.

    1. england /

      I agree with the article but there is nothing new in there. I would rather someone make plans for how this is going to affect the poor and the soon to be poor. There are a growing number of people living on the streets now. What is their future? What of families who need to feed children or elderly. if there are no jobs these people quickly become depressed or ill. It is very easy for militant groups to recruit from this group because they do become desperate, and make the mistake of thinking the militants who loan them money perhaps actually care about their neighborhoods etc This government deliberately got rid of the tourists and everyone stood by and watched so I dont think they will be headed back there any time soon. Tunisia should forget about Tourism for quite a while and focus on the militants. Saving the every day lives is what is at stake now…Forget about outside money over the months people have read the headlines, visited the country or have connections there. Real imagination is what is needed soon. There are many Arab countries that are also fighting terrorism they should join together and send a united messages to those who finance, support or engage in terror….

    2. Big al /

      Islam is emerging, where there is islam the people are poor! show me one country in the arab world that has a strong middle class?

      Democracy is only effective when Christianity is at it’s highest acceptance

      Most Tunisians living overseas who have the highest prosperity level are those that are not committed to Islam.

      I know I have witnessed it in New York, with my very own eyes.

      True prosperity comes from the jews, but when they rejected Jesus, the christians share in it.

      are you broke, in debt, i can demonstrate the power of God by praying for you, miracles, the supernatural power of God is not just religion,

      it’s the kingdom of God, and it’s not word only it’s power to demonstrate the kingdom, tell me what you need believe with me, all things are possible to those who believe, and God will answer my prayers

      because I believe in Jesus, the only one who truly defeated death, and ascended into heaven not Mohammed,

      got it

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      Photo credit: Tristan Dreisbach, Tunisia Live
    • Carthage Theater Days statue display in downtown Tunis.

      Photo credit: Tristan Dreisbach, Tunisia Live
    • Carthage Theater Days statue display in downtown Tunis.

      Photo credit: Tristan Dreisbach, Tunisia Live
    • Carthage Theater Days statue display in downtown Tunis.

      Photo credit: Tristan Dreisbach, Tunisia Live
    • Carthage Theater Days statue display in downtown Tunis.

      Photo credit: Tristan Dreisbach, Tunisia Live
    • Carthage Theater Days statue display in downtown Tunis.

      Photo credit: Tristan Dreisbach, Tunisia Live
    • Carthage Theater Days statue display in downtown Tunis.

      Photo credit: Tristan Dreisbach, Tunisia Live