Moody’s affirms Turkey’s credit rating
ANKARA - Anadolu Agency
In a statement, Moody’s said its confirmation of Turkey’s ratings “reflects the country’s economic resilience and strong fiscal metrics, which have been maintained through the long electoral cycle.”
Turkey has held two general elections this year, on June 7 and Nov. 1, punctuated by political uncertainty.
“The government’s low debt ratio is broadly stable after falling over the past decade, and the debt structure is favorable showing relative resilience to Turkish Lira weakness and forthcoming global interest rate increases,” Moody’s also stated.
The agency noted that Turkey’s strong fiscal position has been maintained despite the country emerging from a cycle of two years in which four elections were held.
“Since the beginning of 2009, Turkey’s debt burden has fallen by more than 10 percentage points to 33.5 percent of GDP in 2014 and Moody’s expects the debt ratio to remain broadly stable at 34 percent of GDP in 2015,” it said.
“Turkey’s favorable debt structure shields the government’s balance sheet from further depreciation of the lira against the dollar, and from expected rises in global interest rates. In fact, the central government’s foreign currency payments due next year are modest at only $8.7 billion (1.2 percent of forecast 2016 GDP),” the note added.
“Real economic growth performance has also remained relatively resilient to shocks over the past two years, reflecting the strengths of Turkey’s large, diversified economy. Although Moody’s expects growth to slow to around 2.9 percent this year (and remain modest next year as well) it still remains higher than other large emerging market sovereigns facing credit challenges,” Moody’s said.
Negative outlook
However, Moody’s maintained its negative outlook for Turkey, citing concerns over its “large external funding needs.”
“The key drivers for maintaining the negative outlook are the ongoing risks to the country’s external financing capacity as a result of its large external funding needs, exacerbated by the fragility of global capital markets and the elevated geopolitical risks that Turkey is facing,” the note said.