Moody’s Downgrades Tunisia’s Credit Rating to B2

Credit rating agency Moody’s downgraded Tunisia’s credit rating to B2 against the backdrop of deteriorating fiscal situation, complicating the government’s plans to borrow from international lenders.

Moody’s cut Tunisia’s rating by one notch to B2– five levels below investment grade and on a par with Argentina, Nigeria, Cameroon and Kenya.

Moody’s rating downgrade will complicate Tunisia’s efforts to raise money abroad. The rating also comes days after Tunisia’s new central bank governor said the nation cannot defend its currency “even if it wanted to” as foreign reserves dwindle.

The dinar has weakened by about 19% against the euro from a year ago, causing a surge in consumer prices, which rose an annual 7.1% in February.

Tunisia’s foreign exchange reserves have fallen to $4.6 billion covering 77 days of imports.