S&P affirms Tunisia

Standard & Poor's said it affirmed its long- and short-term foreign currency sovereign credit ratings on the Republic of Tunisia at BBB and A-3, respectively. At the same time, the long- and short-term local currency ratings of A and A-1, respectively, were also affirmed.

The outlook is stable.

S&P said Tunisia's economy continued to outperform in 2004 despite adverse circumstances, notably slow growth in key markets and high oil prices. Despite a relatively inflexible fiscal expenditure mix, fiscal consolidation continues, with the general government deficit expected to be a moderate 2.6% of GDP in 2005, and is projected to continue to decline thereafter. As a result, general government debt - which, at an estimated 59.6% of GDP in 2004, is still higher than in most BBB peers - should decrease steadily over the next few years, and reach about 50% of GDP by the end of the current decade.

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