Rating review focus is on policies in Turkey, not individuals: Moody’s

LONDON

The focus of Moody’s rating review of Turkey announced this month is not on individuals, international credit rating agency Moody’s said on July 11.

Following the announcement of Turkey’s new cabinet on July 9, Moody’s said in written response to state-run Anadolu Agency’s questions: “The focus of Moody’s rating review of Turkey announced in June is not on individuals but on the capacity of the incoming government as a whole to implement policies that will promote sustainable growth and protect the government’s fiscal strength.”

“Such policies will be key to restoring confidence in the economy and assuring Turkey’s ability to obtain the requisite funding for its large current account deficit and to meet its external repayment requirements,” it said.

“We will therefore monitor the new government’s policy platform as it emerges,” the agency added.

Erdoğan’s son-in-law, former Energy Minister Berat Albayrak, was appointed as treasury and finance minister in the new cabinet.

Moody’s said on June 26 that a review on a possible downgrade of Turkey’s sovereign credit rating will hinge on what policies the country’s government pursues following President Recep Tayyip Erdoğan’s election victory.

“Turkey’s rating review announced earlier in June will focus on the incoming government’s capacity and intention to implement policies that would promote sustainable growth and protect the government’s fiscal strength,” Moody’s had said in a statement then.

Moody’s announced early in June that it would review Turkey’s credit rating to decide if it should be downgraded.

In a written statement, Moody’s said its “decision to place the current [Ba2] rating under review reflects mounting uncertainty regarding the future direction of macroeconomic policy.”

The statement said Turkey’s “already vulnerable external position” will “raise the risk of severe pressures on Turkey’s balance of payments to a level that is no longer consistent with the current rating.”

Moody’s on March 8 downgraded Turkey’s sovereign rating to “Ba2” from “Ba1” and changed its outlook to “stable” from “negative.”