Economic program helps Türkiye win rating upgrades: Şimşek

ISTANBUL

Türkiye has seen its ratings upgraded by major rating agencies in 2024 thanks to the government’s economic program, Finance Minister Mehmet Şimşek said, hailing Fitch’s decision to lift the country’s rating.

“With our medium-term program, we will make permanent the gains we have achieved in the last year and further increase confidence in our economy,” Şimşek wrote on X.

On Sept. 6, Fitch raised Türkiye’s rating for the second time this year, from B+ to BB-, the minister noted.

Moody’s upgraded Türkiye’s ratings to B1 from B3 In July and In May, S&P also lifted the country’s ratings to "B+" from "B."

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

Fitch’s rating upgrade once again shows that the improvements in the macroeconomic indicators of the Turkish economy are also acknowledged in the international arena, Trade Minister Ömer Bolat commented.

“The decline in inflation, the increase in national income, improvements in foreign trade and current account deficits, our determined steps towards achieving financial stability and the increase in foreign exchange reserves strengthen the balancing and stability in our economy,” Bolat said.

On Sept. 6, Fitch upgraded Türkiye's long-term foreign currency issuer default rating to BB- from B+ with a stable outlook.

The rating agency said the upgrade reflects improved external buffers, reduced contingent foreign exchange liabilities, the expectation of lower inflation and lower current account deficits.

Inflation in Türkiye is expected to finish the year at 43 percent, resulting in average inflation of 59.5 percent for 2024, according to Fitch.

The agency forecast inflation to average 31 percent next year and 21 percent by the end of 2025.

Sustained decline in inflation, Significant strengthening of the external buffers and Implementation of reforms that that contribute to rebuilding institutional strength and governance could lead to positive rating action/upgrade, Fitch said in a statement.

"Given the still high projected level of inflation, the premature easing of monetary policy or the abandonment of the current policy direction, which is not our base case, could reignite inflationary pressures and consequently macro-financial stability and balance of payments risks,” it added.