System shift to change rating agencies’ views of Turkish economy: Deputy PM

ANKARA

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Rating agencies’ perception about Turkey will likely change “for the good” when the dual-headedness of the existing system is overcome with the implementation of the presidential system, a top economy official said March 20. 

“The Turkish economy will be successful when stability is maintained, but the existing dual-headed system poses future risks. The presidential system is compliant with international norms,” Deputy Prime Minister Mehmet Şimşek said upon a question about the latest decision by Moody’s, as quoted by Anadolu Agency. 

“After this system is introduced, the evaluation by Moody’s or other rating agencies will change,” the deputy prime minister said.

Turkey lost its last investment grade rating in January when Fitch cut its sovereign debt to junk. And late on March 17, Moody’s cut its outlook on Turkey’s rating to “negative” as risks to the country’s credit profile have “risen materially” in recent months.

Şimşek said reversing the general picture for the better was crucial for the country’s economy.

“We will realize reforms. Thanks to our economic measures, we will increase our investment and export performance … The point is what we do. We will make reforms to boost the resilience of the Turkish economy against any risks or shocks,” he said at a ceremony to sign a protocol between the Treasury and the Credit Guarantee Fund to ease access for small- and medium-sized enterprises to financing. 

Noting that the charter change reform was on the agenda to maintain stability and avert any future risks, Şimşek said: “I attended the G-20 meetings over the last week. I saw that many people had no idea about Turkey’s constitutional change. Many do have misunderstandings regarding this change.” 

Şimşek said Turkey had seen 65 governments despite only being established in 1923.

“The United States’ 45th president just took office although the country’s system was established some 241 years ago. What I mean is however more stable a country’s administration system is, the more successful the country is,” he said. 

According to Şimşek, the dual-headedness of Turkey’s current system “poses future risks,” and the planned presidential system “complies with international norms.”

“After this happens, Moody’s or other rating agencies will change their evaluations. In the past, they upgraded Turkey’s rating six or seven times. When nearly every country’s ratings were downgraded during the latest global economic crisis, our rating was up, as we made reforms and our economic resilience was high. The Turkish economy did very well, too. So we should not overemphasize the recent evaluations by the rating agencies,” he said, while adding that Turkey must still undertake required reforms.