In conjunction with the economic crisis. Fitch downgrades Tunisia's credit rating to negative CCC

In conjunction with the economic crisis, Fitch downgraded Tunisia's credit rating to a negative CCC (CCC-) phase. The downgrade reflects uncertainty about the country's ability to raise sufficient financing to meet its significant fiscal requirements.

According to Fitch, a significant lack of external financing for Tunisia will increase pressure on reserves.

Tunisia's failure to make progress on reforms has prevented the budget from being less affected by shocks.

Fitch downgraded Tunisia from CCC+ to negative CCC-.

This reflects the postponement of a $1.9 billion bailout package from the International Monetary Fund after talks between the two sides stalled, raising the likelihood of a sovereign default.

Data from Tunisia's central bank this week showed that foreign exchange reserves fell to 21 billion dinars ($6.78 billion), enough to cover imports for just 91 days, compared with 123 days the same period a year ago.

"Our basic scenario assumes an agreement between Tunisia and the IMF by the end of the year, but this is a date far beyond previous expectations, and the risks remain high," Fitch said in a statement.

But in the absence of an agreement with the IMF, Fitch believes Tunisia could receive $2.5 billion in external financing this year, mostly from Algeria, the African Export-Import Bank (AfriEximbank), project loans from multilateral partners, and increased grants from bilateral partners.

Fitch expects Tunisia's GDP growth to slow to 1.4% in 2023 from 2.4% last year.