Standard & Poor’s Upgrades Türkiye’s Credit Rating to B+ with Positive Outlook
Ankara, The Gulf Observer: In a significant development reflecting Türkiye’s economic resilience and strategic reforms, the US-based credit rating agency Standard & Poor’s (S&P) announced the elevation of Türkiye’s credit rating from B to B+ while maintaining a positive outlook.
In a statement released on Friday, S&P affirmed, “We have raised our long-term unsolicited ratings on Türkiye to ‘B+’ from ‘B’ and assigned a positive outlook.” This decision comes in the wake of robust economic rebalancing within the nation.
S&P cited the enhanced coordination between monetary, fiscal, and incomes policies following local elections as a pivotal factor underpinning the rating upgrade. It anticipates an improvement in external balances alongside a bolstering of portfolio inflows and a reduction in current account deficits over the forthcoming two years. Furthermore, S&P foresees a trajectory of diminishing inflation and dollarization, albeit with gradual progress and restrained reserve accumulation as the central bank mitigates Turkish lira depreciation.
Moreover, S&P revised its transfer and convertibility assessment to ‘BB-‘ from ‘B+’, signaling a diminishing risk of the sovereign impeding private-sector debtors from servicing foreign currency-denominated debt.
The credit rating agency outlined potential future advancements, highlighting the prospect of further rating escalations contingent upon sustained improvements in balance-of-payments outcomes, a continued decline in inflation, and an uptick in domestic savings denominated in Turkish lira. Such advancements could lead to a substantial augmentation in the government’s usable foreign currency reserves, characterized by gross reserves minus foreign currency borrowed from domestic residents.
The upgrade underscores Türkiye’s steadfast commitment to structural reforms and prudent economic policies, positioning the nation favorably within the global financial landscape. As Türkiye charts a course towards sustainable growth and fiscal stability, the positive outlook heralds promising prospects for its economic trajectory in the years ahead.
