The rating agency projects widening current account deficits and persistent fiscal pressures, while highlighting resilient external financing and international reserves
Fitch Ratings has affirmed Tunisia’s Long-Term Issuer Default Ratings (IDRs) at ‘B-‘ with a Stable Outlook, citing the North African nation’s higher GDP per capita and human development indicators compared to peers, balanced against mounting fiscal vulnerabilities and high government debt.
The rating agency projects Tunisia’s current account deficit will widen to 3.9% of GDP in 2026, driven primarily by higher energy prices that are expected to inflate the trade deficit. While olive oil export receipts surged 44% year-on-year in the first half of 2026 and the services account continues to perform strongly, the country remains highly exposed to prolonged oil price shocks.
External Financing Pressures Ease
In a positive development for Tunisia’s external position, net external financing outflows are projected to decline significantly to 1.4% of GDP in 2026, down from a record 3.6% in 2024. This improvement stems from declining public external debt amortizations and continued disbursements from bilateral and multilateral partners.
Tunisia successfully repaid its sole outstanding €700 million Eurobond that matured in July 2026, supported by loans from the central bank. Fitch anticipates that commercial borrowing access could resume later this year, potentially further reducing net outflows.
International reserves are forecast to decline to 3.3 months of current external payments in 2026 due to the widening current account deficit, though the agency expects reserves to rebound to 3.7 months by 2028 as the deficit narrows. Net foreign direct investment inflows rose to 2% of GDP in 2025, driven by renewable energy and manufacturing investments.
Fiscal Deficits and Debt Concerns
Tunisia’s fiscal deficit is projected to widen substantially to 6.4% of GDP in 2026, significantly above the ‘B’ median of 3.3%. Fuel subsidies alone are expected to add 0.8 percentage points to the deficit, and Fitch does not anticipate meaningful fiscal reform in the near term.
Government debt is expected to rise modestly to 85% of GDP in 2026 and remain stable through 2028 — well above the ‘B’ median of 55%. Approximately 40% of total debt is foreign-currency denominated, exposing the country to exchange rate risks.
The government faces substantial financing needs, with fiscal requirements excluding short-term debt rollover projected at 13.5% of GDP in 2028, compared to the ‘B’ median of 8.9%. The central bank has provided zero-interest loans totaling TND 7 billion in 2024 (4.4% of GDP) and 2025 (4.1% of GDP), with an additional TND 11 billion planned in the 2026 finance bill.
Currency and Inflation Outlook
Tunisia’s real effective exchange rate appreciated by 24% between 2019 and 2025, according to IMF data, due to a broadly stable nominal exchange rate against major currencies and significant inflation differentials with trading partners. To limit foreign exchange demand and preserve reserves, the central bank introduced measures in May 2026 restricting access to financing for non-essential imports.
Inflationary pressures appear contained, with average inflation projected to moderately rise to 5.7% in 2026 before declining to 5% through 2028 — well below the 2022-2024 average of 8.3%. The impact of higher international oil prices is being partially absorbed by fuel subsidies, while favorable weather conditions during the spring growing season have reduced short-term food inflation risks.
Social Tensions and Governance Risks
Recent heatwaves have caused disruptions to electricity and water supplies, triggering demonstrations in major cities amid persistent unemployment. While political risk remains limited according to Fitch, fiscal risk is high, as authorities may be incentivized to increase social allowances and public service hiring.
Tunisia ranks at the 36th percentile on the World Bank Governance Indicators, reflecting low political stability, weakening rule of law, and moderate institutional capacity with perceived corruption levels.
Real GDP growth is projected to average 2% through 2028, suggesting modest economic expansion against a backdrop of significant fiscal and external vulnerabilities.
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