Paris — On Oct. 16, Moody's Investors Service downgraded Tunisia’s outlook from stable to negative but affirmed its B2 rating. The agency cited, inter alia, the continued decline of Tunisia's foreign exchange reserves.

Since the beginning of this year, Tunisia has witnessed a decline of its Central Bank’s foreign exchange reserves. As of May 16, Tunisia's currency reserves dropped to a level that could cover an average of 73 days of imports, equivalent to about $4.2 billion. It further plummeted to a level worth just 69 days of import cover, equivalent to about $3.9 billion, on Sept. 6. In December 2017, currency reserves stood at 90 days of import cover, equivalent to about $5 billion.

The decline in foreign exchange reserves reduces Tunisia's ability to repay its external debt and weakens the confidence of foreign investors in the local economy.

Meanwhile, the economic sectors that account for the country's main sources of foreign exchange are growing. The tourism sector, one of the main sources of foreign exchange in Tunisia, increased revenues by about 40% in the first half of this year compared to the same period last year.