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.
'Cheb%20Khaled'
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Sun jukebox
Rufus Thomas, Bear Cat (The Answer to Hound Dog) (1953)
This rip-off of Leiber/Stoller’s early rock stomper brought a lawsuit against Phillips and necessitated Presley’s premature sale to RCA.
Elvis Presley, Mystery Train (1955)
The B-side of Presley’s final single for Sun bops with a drummer-less groove.
Johnny Cash and the Tennessee Two, Folsom Prison Blues (1955)
Originally recorded for Sun, Cash’s signature tune was performed for inmates of the titular prison 13 years later.
Carl Perkins, Blue Suede Shoes (1956)
Within a month of Sun’s February release Elvis had his version out on RCA.
Roy Orbison, Ooby Dooby (1956)
An essential piece of irreverent juvenilia from Orbison.
Jerry Lee Lewis, Great Balls of Fire (1957)
Lee’s trademark anthem is one of the era’s best-remembered – and best-selling – songs.
The British in India: Three Centuries of Ambition and Experience
by David Gilmour
Allen Lane
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
Pad Man
Dir: R Balki
Starring: Akshay Kumar, Sonam Kapoor, Radhika Apte
Three-and-a-half stars
Quick pearls of wisdom
Focus on gratitude: And do so deeply, he says. “Think of one to three things a day that you’re grateful for. It needs to be specific, too, don’t just say ‘air.’ Really think about it. If you’re grateful for, say, what your parents have done for you, that will motivate you to do more for the world.”
Know how to fight: Shetty married his wife, Radhi, three years ago (he met her in a meditation class before he went off and became a monk). He says they’ve had to learn to respect each other’s “fighting styles” – he’s a talk it-out-immediately person, while she needs space to think. “When you’re having an argument, remember, it’s not you against each other. It’s both of you against the problem. When you win, they lose. If you’re on a team you have to win together.”
Paatal Lok season two
Directors: Avinash Arun, Prosit Roy
Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong
Rating: 4.5/5
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
At a glance - Zayed Sustainability Prize 2020
Launched: 2008
Categories: Health, energy, water, food, global high schools
Prize: Dh2.2 million (Dh360,000 for global high schools category)
Winners’ announcement: Monday, January 13
Impact in numbers
335 million people positively impacted by projects
430,000 jobs created
10 million people given access to clean and affordable drinking water
50 million homes powered by renewable energy
6.5 billion litres of water saved
26 million school children given solar lighting
TUESDAY'S ORDER OF PLAY
Centre Court
Starting at 2pm:
Elina Svitolina (UKR) [3] v Jennifer Brady (USA)
Anastasia Pavlyuchenkova (RUS) v Belinda Bencic (SUI [4]
Not before 7pm:
Sofia Kenin (USA) [5] v Elena Rybakina (KAZ)
Maria Sakkari (GRE) v Aryna Sabalenka (BLR) [7]
Court One
Starting at midday:
Karolina Muchova (CZE) v Katerina Siniakova (CZE)
Kristina Mladenovic (FRA) v Aliaksandra Sasnovich (BLR)
Veronika Kudermetova (RUS) v Dayana Yastermska (UKR)
Petra Martic (CRO) [8] v Su-Wei Hsieh (TPE)
Sorana Cirstea (ROU) v Anett Kontaveit (EST)
