A sovereign debt default in Tunisia could cost the country's banks up to $7.9 billion, which would represent 102 per cent of their total equity, ratings agency S&P Global warned on Tuesday.
The economic shock of the Covid-19 pandemic and ongoing political instability in the country, which is worsening its fiscal outlook, also led the agency to downgrade ratings on three of Tunisia's banks.
"Tunisian banks' exposure to their sovereign has more than doubled over the past decade along with a sharp increase in government indebtedness," S&P Global analyst Mohamed Damak said.
Tunisia's already weak economy has been hit hard by the pandemic, with gross domestic product contracting 8.8 per cent last year, the biggest economic downturn since the country gained its independence in 1956, according to the International Monetary Fund. The country's youth unemployment rate increased to 36.5 per cent in the final quarter of 2020 and lower tax revenues meant its fiscal deficit grew to 10.6 per cent, the fund's most recent Regional Economic Outlook showed.
The government turned to domestic lenders to finance spending, with borrowing from local banks covering more than 50 per cent of its gross financing needs, the IMF said.
Tunisia's debt-to-GDP is forecast to grow to 91.2 per cent this year, from 87.6 per cent in 2020, according to the Washington-based lender.
A sovereign default over the next 12 months "remains highly unlikely", but if it were to happen it would cost banks between $4.3bn and $7.9bn, or 55 per cent to 102 per cent of their equity, S&P Global said.
The agency downgraded long-term issuer ratings on Arab Tunisian Bank, BH Bank and Banque de Tunisie et des Emirats by one notch to CCC+, from B- previously. The rating is seven notches below investment grade.
The Tunisian economy is likely to take time to return to pre-pandemic levels, with GDP growth averaging only 2.4 per cent over the next five years, according to IMF projections. Tourism revenues for the first four months of this year fell 55 per cent, data from the Central Bank of Tunisia showed last week.
The creditworthiness of Tunisian corporates and retail customers is likely to deteriorate over the next two years, with non-performing loans forecast to rise to about 19 per cent over the next 12 to 24 months, S&P Global said.
A political stand-off between the country's three main branches of power – the president, prime minister and parliament – is also increasing economic uncertainty, the agency said.
Despite this, a Tunisian government delegation held talks with the IMF in Washington last week about a proposed economic reform programme that could unlock further funding.
The fund stands "ready to support Tunisia and the Tunisian people to cope with the impact of the crisis and move forward to an inclusive, job-rich recovery", IMF communications director Gerry Rice told a press briefing last week.
The proposed reforms included measures such as a plan to freeze government salaries this year in a bid to cut the country's wage bill to 15 per cent of GDP, from 17.4 per cent last year. Part-time working and early retirement incentives are also planned as a measure to bring down wages.
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The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
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What sanctions would be reimposed?
Under ‘snapback’, measures imposed on Iran by the UN Security Council in six resolutions would be restored, including:
- An arms embargo
- A ban on uranium enrichment and reprocessing
- A ban on launches and other activities with ballistic missiles capable of delivering nuclear weapons, as well as ballistic missile technology transfer and technical assistance
- A targeted global asset freeze and travel ban on Iranian individuals and entities
- Authorisation for countries to inspect Iran Air Cargo and Islamic Republic of Iran Shipping Lines cargoes for banned goods
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Killing of Qassem Suleimani
Name: Colm McLoughlin
Country: Galway, Ireland
Job: Executive vice chairman and chief executive of Dubai Duty Free
Favourite golf course: Dubai Creek Golf and Yacht Club
Favourite part of Dubai: Palm Jumeirah
Miss Granny
Director: Joyce Bernal
Starring: Sarah Geronimo, James Reid, Xian Lim, Nova Villa
3/5
(Tagalog with Eng/Ar subtitles)
UAE currency: the story behind the money in your pockets
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
ESSENTIALS
The flights
Fly Etihad or Emirates from the UAE to Moscow from 2,763 return per person return including taxes.
Where to stay
Trips on the Golden Eagle Trans-Siberian cost from US$16,995 (Dh62,414) per person, based on two sharing.
The%20specs
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GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
500 People from Gaza enter France
115 Special programme for artists
25 Evacuation of injured and sick
The five pillars of Islam
The biog
Name: Younis Al Balooshi
Nationality: Emirati
Education: Doctorate degree in forensic medicine at the University of Bonn
Hobbies: Drawing and reading books about graphic design
Company%20profile
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UAE currency: the story behind the money in your pockets
MATCH INFO
Champions League quarter-final, first leg
Ajax v Juventus, Wednesday, 11pm (UAE)
Match on BeIN Sports
The 12 Syrian entities delisted by UK
Ministry of Interior
Ministry of Defence
General Intelligence Directorate
Air Force Intelligence Agency
Political Security Directorate
Syrian National Security Bureau
Military Intelligence Directorate
Army Supply Bureau
General Organisation of Radio and TV
Al Watan newspaper
Cham Press TV
Sama TV
Key findings of Jenkins report
- Founder of the Muslim Brotherhood, Hassan al Banna, "accepted the political utility of violence"
- Views of key Muslim Brotherhood ideologue, Sayyid Qutb, have “consistently been understood” as permitting “the use of extreme violence in the pursuit of the perfect Islamic society” and “never been institutionally disowned” by the movement.
- Muslim Brotherhood at all levels has repeatedly defended Hamas attacks against Israel, including the use of suicide bombers and the killing of civilians.
- Laying out the report in the House of Commons, David Cameron told MPs: "The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism."
SPEC%20SHEET%3A%20NOTHING%20PHONE%20(2a)
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The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
