Fitch upgrades Türkiye's credit rating to BB- on improved financial outlook

LONDON

Credit rating agency Fitch upgraded Türkiye's Long-Term Foreign-Currency Issuer Default Rating (IDR) from B+ to BB- on Friday.

“International credit rating agency Fitch raised our credit rating for the second time this year, from B+ to BB-," Finance Minister Mehmet Şimşek stated on his social media account.

"Thanks to our program that strengthens our macro-financial stability and increases our resilience, we are the only country to receive a rating upgrade from three major credit rating agencies in 2024," Şimşek said.

"With our Medium Term Program announced this week, we will make the gains we have achieved in the last year permanent and further increase the confidence in our economy," he added.

Upgrade reflects several key factors, including improved external financial buffers, reduced contingent foreign exchange liabilities, and the anticipation of a consistent policy mix. It also considers the continued, albeit reduced, inflation and lower current account deficits.

Fitch anticipates that inflation in Türkiye will close the year at 43%, with an average rate of 59.5% projected for 2024. The agency estimates that inflation will average 31% next year and decrease to 21% by the end of 2025.

In its statement, Fitch emphasized that despite expectations for high inflation, any premature easing of monetary policy or a shift from the current policy direction could reignite inflationary pressures and pose risks to macro-financial stability and balance of payments.

Earlier in March, Fitch had upgraded Türkiye's rating from B to B+ and revised its outlook from stable to positive. This change reflected increased confidence in the policies implemented after the May elections last year, including more aggressive monetary policy measures that have reduced macroeconomic and external vulnerabilities.