9/29/2016

Turkey to continue with economic reforms; more structural changes underway

Anadolu Agency - Following Moody’s recent announcement downgrading Turkey’s credit rating to non-investment grade, Turkish government officials commented on Turkey’s macroeconomic figures and addressed issues raised by the agency.

 

According to Deputy Prime Minister Mehmet Şimşek, Turkey is continuing its efforts to further implement structural economic reforms and maintain fiscal discipline. He emphasized that expediting structural economic reforms while remaining committed to fiscal discipline - targets that have already been placed on the government’s agenda - would be the best response to the credit agencies. Şimşek also pointed out that the fundamentals of the Turkish economy are quite solid. In particular, the economy grew 5.2 percent in the post-global financial crisis era despite domestic and international shocks. He also drew attention to the latest Treasury auction, which attracted a higher than expected demand with a lower interest rate. Şimşek emphasized that reforms will gain momentum in order to reach Turkey’s targets.

 

Meanwhile, Deputy Prime Minister Nurettin Canikli said that indicators have shown that recent rating cuts have had no effect on the Turkish economy. Canikli added, "There were remarks that Turkey may find itself face-to-face with a tough period after a rating cut; however, we made sure this would not happen as our assessments are completely economic, and absolutely not politically motivated.” Canikli said that Turkey has seen USD 900 million of net capital inflow during August, with another USD 250-300 million coming in September so far. "If net capital inflows are on track even after such an incredible shock as the July 15 coup attempt, we should all accept that it is highly unlikely that it would be affected by a Moody's rating cut," he said.

 

Also responding to the credit ratings, Finance Minister Naci Ağbal stated that Turkey is already tackling some of the challenges highlighted by Moody’s, including structural reforms and improving the quality of institutions in the country. Ağbal mentioned during an interview that Moody’s concerns on the rule of law, as well as the risks of a slowing economy, are not reasonable since the Turkish government, with all its institutions, has taken the required measures to install order and further strengthen democracy.

rating; downgrade; moody’s; turkey; reform

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