Prudent macroeconomic policies together with structural reforms have resulted in consistently strong output growth in the Republic of Tunisia. Real GDP is increasing at an average of more than five percent per year, despite lackluster growth in the EU, Tunisia's main trading partner, asserts the latest RatingsDirect report from Standard & Poor's.
The international ratings agency affirmed its triple-B foreign currency and single-A local currency long-term sovereign credit and senior unsecured debt ratings, as well as its A-3 foreign currency and A-1 local currency short-term sovereign credit ratings, on Tunisia. The outlook is stable. The government's commitment to economic reforms will underpin Tunisia's investment-grade ratings in the coming years, S&P added.
These ratings reflect a decline in the general government deficit to an estimated 2.3 percent of GDP in 2001 and 2.5 percent in 2002 compared with 3.9 percent in 1997. As a result, the general government debt, estimated at 61 percent of GDP in 2001, should trend downward if corrective measures regarding social security finances are undertaken in the next couple of years, the S&P report asserted.
Inflationary pressures are relatively modest, with consumer prices increasing by about three percent annually. Moreover, a flexible exchange rate policy, unlike neighboring states, has helped maintain the country's competitiveness.
However, the report noted that wages consume 37 percent of government revenues, while new revenues will need to be raised to replace tariffs, which are scheduled to fall under the country's EU Association Agreement (EUAA). Further reforms are needed to reduce its high unemployment and to meet increased competition as the EUAA is implemented. — (menareport.com)
© 2001 Mena Report (www.menareport.com)
