Return to orthodox policies credit positive, says Moody’s

Return to orthodox policies credit positive, says Moody’s

ISTANBUL
Return to orthodox policies credit positive, says Moody’s

The return to more orthodox economic policies is credit positive, but sustainably reducing Türkiye's macroeconomic imbalances will take time, Moody’s has said.

The government of Türkiye’s credit ratings are supported by the country's large, diversified and resilient economy, a moderate government debt burden and improving monetary and macroeconomic policy effectiveness, it added in a report on Jan. 24

These strengths are balanced against institutional challenges and external vulnerabilities, it noted.

The significantly tightened monetary policy stance has increased confidence in the Turkish Lira, setting in motion the economy's rebalancing away from unsustainably buoyant domestic demand, reducing inflationary pressures, it stressed.

In the report issued on Jan. 24, Moody’s said it completed a period review of the ratings of Türkiye. But it did not take a rating action.

“This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future,” it said.

In July last year, Moody’s raised Türkiye's long-term foreign- and domestic-currency issuer and foreign-currency senior unsecured ratings from "B3" to "B1" with a positive outlook.

The rating could be upgraded if the authorities continue to effectively implement policies that restore macroeconomic stability, reduce inflation on a sustained basis, achieve lasting de-dollarization of the economy and rebalance growth away from credit-driven domestic demand, Moody’s said on Jan. 24.