Tunisia Default Risk Rising If IMF Deal Delayed: Morgan Stanley
- North African nation was downgraded by Fitch Ratings last week
- Domestic turmoil has held back fiscal reform while debt mounts
Tunisians shop at a market near Tunis.
Photographer: Fethi Belaid/AFP/Getty Images
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Tunisia is unlikely to clinch a loan program with the International Monetary Fund this year, with political opposition to fiscal reforms raising the risk that the government will eventually default on its debt, Morgan Stanley said.
“Assuming that Tunisia muddles along in 2022 and without substantial reforms, this raises the probability of default in 2023 on account of the high financing needs,” the New York-based investment bank wrote in a research note. It said the mounting pressure would likely push the government to finalize a new agreement with the IMF in 2023, though that might be too late to avoid some debt restructuring.