Look at who owns Fitch, says economy minister

ISTANBUL- Hürriyet Daily News

Turkish Economy Minister Zafer Çağlayan. AA photo

Turkey’s economy minister slammed Fitch yesterday, accusing the international rating agency of not being objective.

“The capital structure of Fitch should be monitored,” Minister Zafer Çağlayan said, following the agency’s Nov. 23 downgrade of Turkey’s outlook from “positive” to “stable” given a recent increase in risks.

“The decision of the rating agency does not mean a rate cut but just a change in the outlook,” Çağlayan said while speaking to journalists at the Bosporus Regional Cooperation Summit in Istanbul. “It says that Turkey’s note might be upgraded in the future,” Çağlayan said, but the objectivity and credibility of the rating agency should be questioned following its decision to downgrade.

Commenting on the structure of Fitch, Çağlayan said 60 percent of the rating agency was owned by French investors.

The long-term borrowing rate of France remains 1.5 notches higher than Germany and one notch higher than the United Kingdom, the minister said. “The facts in our hand demonstrate that Turkey is one of the safest harbors of the world.”

One of the Fitch warnings on the Turkish economy was the ever-growing current account

gap, which stands around 10 percent of the country’s gross domestic product.

“Turkey’s current account deficit is not a new issue,” Çağlayan said, noting that Turkey’s economy administration is in the process of getting the gap under control.

“We will also finalize the preparations for Turkey’s new incentives program by the end of this year,” he said.

Foreign direct investment

During his speech at the conference, Çağlayan said the total amount of the foreign direct investments to Turkey was only $14.5 billion between 1923 and 1980, and the amount rose to $105 billion in the last eight years. “European investors will not just sit and wait during the crisis but continue to invest in Turkey’s economy,” Çağlayan said, noting that nearly $9.5 billion of foreign investment had been directed by European countries to Turkey by the end of September.

He also said total direct foreign investment increased to $10.9 billion by the end of September this year from $5.1 billion in the same period last year