S&P confirms the BB- rating of the Tunisian banking sector
Credit ratings company Standard and Poor’s (S&P) confirmed Tunisia’s rating of BB- in the long term and B in the short term,with a negative outlook.Credit ratings company Standard and Poor’s (S&P) confirmed Tunisia’s rating of BB- in the long term and B in the short term,with a negative outlook.
This is the same rating it issued on February 19, 2013 for the country's banking sector.
In a report, S&P justified its negative outlook by citing the political and social uncertainties that persist in Tunisia, moderate economic growth prospects that exacerbate large deficits, weak asset quality, strong competition in a fragmented industry and a lack of customer deposits to refinance bank loans.
According to economist Moez Laabidi, quoted by Tunisia Live, the reason why S&P has not downgraded Tunisia is because of the agreement the country signed with the IMF, which provided a funding pool for the Tunisian government.
"The deal had a positive repercussion on our economic prospects," he added.
Among the strengths of the Tunisian banking sector, S&P cited the fact that the Tunisian economy is relatively diversified. It also hailed the tangible efforts made by politicians to reach a consensus on the political transition, and moderate private sector debt.
Besides, Ecofin agency reported that S&P expects a nominal loan growth of about eight per cent over the next 12-18 months, reflecting a weak economic recovery and pressure on bank liquidity. It also forecasts a stabilisation of unproductive loans to about 15 per cent of the total loans in the banking system.