Moody's decision regarding Turkey's credit rating

Moody's issued a statement regarding the periodic review conducted on January 16.

In the statement from the credit rating agency, it was noted that Turkey's credit ratings are supported by the country's large, diversified, and resilient economy, moderate public debt burden, and improving monetary and macroeconomic policy effectiveness.

The statement indicated that the significantly tightened monetary policy stance has limited domestic credit growth, increased confidence in the Turkish lira, enabled the rebalancing of the economy, reduced inflationary pressures, narrowed the current account deficit, and encouraged foreign capital inflows.

The statement, which noted that inflation is expected to continue its decline this year and fall to approximately 30 percent by the end of the year, emphasized that central bank foreign exchange reserves, excluding swaps, are now firmly positive and have reduced external vulnerability risks.

The statement mentioned that the fiscal stance is expected to become more restrictive this year, which is projected to support rebalancing and disinflation in the economy.

In its statement, Moody's noted that Turkey's credit rating could be upgraded if policies that restore macroeconomic stability, consistently lower inflation, ensure permanent de-dollarization of the economy, and shift growth away from credit-driven domestic demand continue to be implemented effectively.

MOODY'S HAD PREVIOUSLY RAISED TURKEY'S CREDIT RATING BY TWO NOTCHES

Moody's last raised Turkey's credit rating by two notches from "B3" to "B1" on July 19, 2024, and maintained the credit rating outlook as "positive."

In the credit rating agency's calendar for this year, the first credit rating assessment date for Turkey was set for January 24.

However, the fact that international credit rating agencies provide dates for countries' credit ratings and outlooks in their annual calendars does not mean that an update will definitely be made. Credit rating agencies can also conduct assessments outside of the specified dates.

Moody's is expected to conduct its next scheduled assessment of Turkey on July 25.

News Source: AA