Fitch, a leading global credit rating firm, has revealed that Tunisia’s banking sector has sufficient liquidity to finance its government’s spending in 2025, thanks to robust customer deposits and low private sector lending. As such, the country’s domestic debt, excluding loans from the Central Bank of Tunisia (CBT), is expected to rise this year, following a 9% year-on-year (y-o-y) increase in 2024.
In their latest assessment, Fitch disclosed that total bank deposits grew by 6%, (y-o-y), in August 2024, while credit to the private sector grew marginally by 1.5% in the same period.
However, the rating agency anticipates a significant decline in fiscal deficits this year to 5.7% from 6.8% reported in 2024, which, in turn, will drive down the total financing needs of the northern African nation.
The projected decrease is based on the assumption that Tunisia will pay less for oil subsidies as Brent oil prices fall by 10 U.S dollars per barrel, (y-o-y), hence cutting down expenditure while revenue grows from higher government taxes.
“Fitch expects Tunisia’s fiscal deficit to decrease to 5.7% of GDP in 2025 (2024 estimate: 6.8%), driven by a fall in the cost of oil subsidies (Fitch assumes Brent oil prices will fall to USD70/bbl in 2025 from USD80/bbl in 2024) and an increase in tax revenue,” the report stated.
“Lower fiscal deficits will contribute to a reduction in Tunisia’s total financing needs (including long-term amortisations, but excluding short-term amortisations) to 16.5% of Gross Domestic Product in 2025 and 15% in 2026, down from 18.9% in 2024.”
“Tunisia’s 2025 budget raised the corporate income tax rate to 20% from 15%, introduced an ‘exceptional contribution’ of 2% of profits for companies with revenue over 20 million TND ($62.8 million) and increased the marginal personal income tax rate to 40% from 35%.”
Fitch expects a further decrease in the country’s fiscal deficit in 2026 to 5.5% of GDP, partly driven by falling oil prices.
On external funding, the agency expects Tunisia to secure TND 4.8 billion (or $1.5 billion) from foreign creditors in 2025.
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This is equivalent to 2.8% of the country’s GDP, slightly higher than 2.5% recorded in 2024, but significantly less than the 5.5% average over 2018-2022.
This forecast comes after the firm upgraded Tunisia’s sovereign credit rating from CCC- to CCC+ in September 2024, indicative of increased confidence in the nation’s ability to meet its large fiscal financing needs.
Fitch attributed the improved stance to a stronger external position supported by sufficient foreign currency reserves, which allows the country to meet all its debt obligations.
With an international reserve of $8 billion as of the end of 2024, Tunisia is expected to meet upcoming debt maturities, including a $1 billion Eurobond.
