In its annual report on Tunisia, Moody's Investors Service said the country's Baa3 long-term foreign currency ceiling and positive outlook reflect the government's record of economic reforms reaching back more than a decade, and the positive economic and social impact of further integration within the European Union.
"Tunisia is increasingly becoming an export platform for light manufacturers into the EU—an access that will be critical if the country is to reduce is current account deficit and its still-high unemployment rate," said Moody's Vice President Sara Bertin-Levecq, author of the report.
"A maturing fiscal system has resulted in a larger tax base with higher tax revenues keeping the budget deficit under control." Tunisia has averaged 5.2 percent growth over the past several years despite the volatility of agricultural output, says the Moody's report.
The consistent high rates of growth are the result of a large increase in investment, continued growth in exports, and a diversified strategy in the tourism sector. "Until 2006, however, the economy will need to grow at a rate of at least six percent per year in order to absorb new workers entering the national workforce from the ranks of Tunisia's large population of young people," says Bertin-Levecq.
From 1995 to 1999, the current account deficit averaged three percent of Gross Domestic Product (GDP). It started to deteriorate in 2000 due to several factors, including a higher energy bill, a strong domestic demand, and a significant increase in foreign direct investment related, in part, to the privatization of two cement factories.
In 2001, the high current account deficit corresponded to a rise in imports instead of surging foreign direct investment. "A large part of the current account deficit has also been financed through foreign direct investment, contributing to the stabilization of external debt levels,”
sid Bertin-Levecq.
The rating agency's report, "Tunisia: Global Credit Research," is a yearly update to the markets and is not a formal action to alter the credit rating of the issuer. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
