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Tunisia and Egypt are Edging Closer to Major Debt Crises

The countries are already being challenged by shortages of essential goods and financial market dysfunction and in Tunisia’s case, a political crisis caused by President Kais Saied’s consolidation of power and crackdown on opponents. Egypt, as North Africa’s largest economy and most populous nation, has long been assumed to be too big to be allowed to fail, but Tunisia too carries outsize significance as the birthplace — and supposed sole success story — of the Arab Spring. Tunis’ hopes for a long-awaited IMF support are still flickering, though concerns remain whether it would stick to a programme given the fractured politics. Its debt-to-GDP ratio is fast approaching 100% and three major currency devaluations totalling 50% in little over a year means the interest payments on its debt alone — a large slab of which is borrowed in dollars, euros or yen — will soak up more than half of the government’s revenues next year according to Fitch.