Deputy PM Şimşek defends Turkey's policies against Moody’s and Fitch decisions

Deputy PM Şimşek defends Turkey's policies against Moody’s and Fitch decisions

ISTANBUL
Deputy PM Şimşek defends Turkeys policies against Moody’s and Fitch decisions

Turkish Deputy Prime Minister Mehmet Şimşek defended Turkey’s economic policies on June 2, a day after Moody’s placed the country’s rating on review for a downgrade and Fitch said it was monitoring its banks.

“We are addressing market concerns through credible policy actions,” he wrote on his Twitter account, pointing that Turkey has tightened and simplified monetary policy and introduced macro prudential measures.

Work has been in progress to further strengthen the policy mix, tightening fiscal policy via spending cuts, he added.

The Turkish currency has tumbled some 20 percent this year amid geopolitical risks, strengthening dollar and deepening concern about President Recep Tayyip Erdoğan’s grip on monetary policy after presidential elections on June 24.

Moody’s, which had already downgraded the country’s rating in March, announced on June 1 that it would review Turkey’s Ba2 rating for a downgrade, citing concern over economic management and erosion of investor confidence.

“The negative shift in investor sentiment is a significant challenge for a country that is deeply dependent on net capital inflows,” Moody’s said, adding that the authorities were unable to fully address country’s structural economic problems.

“The erosion of confidence was triggered in part by the advancement of presidential and parliamentary elections to 24 June, 17 months ahead of schedule. That decision exacerbated existing investor concerns regarding the negative credit impact of the economic, fiscal and monetary policy settings, and heightened concerns that the next administration would move further down the path of policy options detrimental to economic and financial stability,” the Moody’s statement read.

Fitch focuses on banks

Separately, Fitch said it would place 25 Turkish banks’ ratings on watch negative.

“The RWNs (Rating Watch Negative) placed on all Turkish banks’ VRs (Viability Rating) reflect risks to their performance, asset quality, capitalization and, in most cases, liquidity and funding profiles following a recent period of increased market volatility,” Fitch said in a statement.

The central bank hiked the interest rate by 300 basis points to 16.5 percent in an emergency meeting on May 23 to prop up the lira, which had hit a record low of 4.92 against dollar.

Another prominent credit rating agency, Standard and Poor’s, has also assigned the country non-investment grade ratings.

Turkey, Moody's, Fitch, Fitch Ratings, Standard&Poor's, Standard and Poors, Mehmet Şimşek, şimşek