Spillovers from war could tip Tunisia towards crisis

Spillovers from the Iran war threaten to exacerbate existing strains in Tunisia’s economy. If officials continue to maintain a tight grip on the dinar, macroeconomic imbalances are likely to build, increasing the risk of a sharp and disorderly adjustment in the currency further down the line. This would worsen Tunisia’s public debt dynamics and, given officials’ limited appetite for fiscal austerity, could ultimately tip the sovereign towards default.