TEXT-Fitch: assassination a setback to Tunisia transition
Feb 7 - The assassination of Tunisian politician Chokri Belaid and the announcement of the dissolution of the Tunisian government increase the uncertainty about the country's political transition, Fitch Ratings says. The risk that divisions among the population and politicians will result in intensifying social and political violence has risen. We downgraded Tunisia to 'BB+' with a Negative Outlook in December to reflect the longer-than-expected transition period, characterised by weak economic performance and prolonged political uncertainty. The rating already incorporates the risk of heightened political trouble. However, the recent announcement by the IMF that negotiations with the Tunisian authorities for a precautionary stand-by agreement to support the country's reform programme were advanced, is supportive of the rating. Our base case in December envisaged elections in 2013 leading to the formation of a stable government and to the gradual decline of social and political tensions. As we said, the intensification and spread of social violence, generating political destabilisation and jeopardising the transition, would be a potential ratings trigger. If the likelihood of this increases, with the inability to form a new government and/or a destabilised government, Fitch could downgrade Tunisia's ratings again. The assassination of Chokri Belaid, the leader of a left-wing secular opposition party, on Wednesday prompted protests in some large Tunisian cities, clashes between protesters and the police, and the deployment of the army. Opposition parties announced they would stop sitting at the National Constituency Assembly (NCA), which is in charge of drafting the long-awaited new constitution of the country, and a general strike will be organised on Friday. The assassination occurred after several weeks of increasing tensions within the coalition government, as Prime Minister Hamdi Jebali of Ennahda, the largest party in the coalition, attempted a reshuffle. Social tension remained significant in the country, fuelled both by deteriorated economic prospects and by Salafi movements, which were blamed for several violent actions in 2012. The rising influence and violence of extremist movements in recent months have exacerbated divisions between the secularist opposition parties and the Islamist Ennahda. Prime Minister Jebali announced on Wednesday that the government would be dissolved and replaced by an apolitical government of technocrats in charge of day-to-day management until elections could be held in the shortest time possible. However, dates for the designation of this new government and for the elections have yet to be announced. On Thursday, influential Ennahda leaders publicly contradicted Jebali's announcement, raising uncertainty over any transfer of power. A split of Ennahda would fuel the political crisis even more. The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings. Applicable Criteria and Related Research: Tunisia
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