Tunisia: Fitch Ratings has upgraded Tunisia's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDR) to 'B-' from 'CCC+'. The Outlook is Stable. In a statement, the agency highlighted a continued improvement in Tunisia's external position, with lower current account deficits (CADs), resilient net foreign direct investments (FDI), and disbursements from multilateral and bilateral partners. According to Agence Tunis Afrique Presse, Tunisia's ratings remain constrained by limited access to external financing in the absence of market access and high vulnerability of the budget and external accounts to commodity price shocks, without a reform of subsidies. Fitch forecasts the CAD will widen to 2.2% of GDP in 2025 and 2.8% in 2027, due to lower olive oil prices and higher goods imports. This remains substantially lower than the 2010-2022 average of 7.9%, driven by an improvement in the balance on services and remittance inflows. The report stresses that net FDI inflows, at 1.4% of GDP in 2024, have pr oven resilient to political and external shocks. A rebound in FDI inflows is anticipated in 2025, with continued disbursements from multilateral and bilateral partners through 2025-2027. External financing flows are expected to narrow from 3.7% of GDP in 2024 to 1% in 2027. Fitch also projects fiscal financing needs, excluding short-term debt roll-over, will decline from 18% of GDP in 2024 to 13.5% in 2027. The stability of domestic amortisations is attributed to zero-interest loans provided by the central bank to the government. The government is forecasted to require 9% of GDP in long-term domestic financing, excluding central bank financing, in 2025, and 8% in 2026. The rating agency highlighted the increased sovereign-bank nexus, as the domestic banking sector could help meet the sovereign's financing needs. With a reduction in fiscal deficits, the wage bill is expected to be contained in 2025. Public debt is projected to remain high, at 83% of GDP in 2025 from 84.5% in 2024, with a small decline attrib uted to a weakening US dollar against the dinar.