Middle East sovereigns could be at risk of contagion from the ongoing Tunisian revolt, ratings agency Standard & Poor’s said on Thursday.
Egypt, Algeria, Jordan, and Morocco are susceptible to the type of political unrest that led to the resignation of Tunisia’s president Zine El Abidine Ben Ali, the agency said in an emailed statement.
“Many of the economic and political factors that contributed to the protests… can be found to different degrees and varying combinations in other sovereigns in the region,” analysts said, citing high unemployment, a young population and rising food prices as examples.
“Although we don’t expect a wave of regional political instability, we see Egypt, Algeria, and Jordan, and to a lesser degree Morocco as most vulnerable in this respect.”
The ongoing unrest in Tunisia is also likely to impact public spending programmes in the region, the report said.
“This is because governments are trying to moderate or prevent popular discontent by measures to try to stabilise or lower prices of staples and fuels.
“Downward rating pressures from populist government spending on subsidies, tax cuts, and public sector employment are likely to emerge sooner for countries that already have strained public finances and lack fiscal reserves.”
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