Five years after Saied’s power grab, Tunisia’s old grievances resurface

This is not an equity story so much as a sovereign-financing trap. When a government concentrates power without improving utilities, the market eventually prices a higher probability of ad hoc controls, arrears, and external funding delays; that shows up first in eurobond spreads and FX availability, not in broad EM benchmarks. The immediate reaction can stay muted because Tunisia is small, but the 1-3 month risk is that worsening service failures make reform politically impossible, which raises the probability of an IMF stall or bilateral support fatigue.

The second-order losers are state-linked banks, utilities, and any importer-dependent business that needs steady FX and working capital. Tourism and airlines are a more important downstream channel than the protests themselves: once households are queuing for essentials, the country’s operational reliability gets questioned, which can hit bookings and push local demand into the informal economy. The more central issue is circularity: shortages increase anger, anger reduces policy flexibility, and reduced flexibility deepens shortages.

The contrarian view is that investors may be underestimating how quickly a “political risk” episode can become a balance-of-payments event. The consensus may dismiss Tunisia as untradeable and therefore harmless, but the catalyst is a missed external financing step, not headline risk. The thesis is falsified if there is a credible IMF/bilateral package, reserve stabilization, and visible improvement in electricity/water continuity over the next 1-2 quarters.