Moody’s cuts Turkey rat­ing to junk level amid po­lit­i­cal tur­moil

The Myanmar Times - - Business -

MODY’S has cut Turkey’s sov­er­eign debt rat­ing by one notch to the spec­u­la­tive or “junk” level, say­ing the coun­try’s fi­nances have weakened amid the po­lit­i­cal tur­moil.

It also said that the gov­ern­ment’s re­ac­tion to the July coup at­tempt had set back ex­pected re­forms and the rule of law.

“Turkey con­tin­ues to op­er­ate in a frag­ile fi­nan­cial and geopo­lit­i­cal en­vi­ron­ment,” Moody’s said.

“Its ex­ter­nal vul­ner­a­bil­ity has risen, both over the past two years and more re­cently as a re­sult of un­pre­dictable po­lit­i­cal de­vel­op­ments and volatile in­vestor per­cep­tion.”

Moody’s said a fall in tourism re­ceipts, which rep­re­sent 4.4 per­cent of the econ­omy, due to Rus­sia’s sanc­tions last year and a rise in at­tacks in­side the coun­try had weakened its bal­ance of pay­ments.

At the same time, it noted, ex­ter­nal debt had surged in the gov­ern­ment, cor­po­rate and bank­ing sec­tor, with some US$156 bil­lion in pay­ments due this year.

“This large ex­ter­nal fund­ing need ex­poses the coun­try to sud­den shifts in in­vestor con­fi­dence, which has been weak and volatile in re­cent months,” Moody’s said.

While the coun­try ap­pears to have weath­ered fi­nan­cially the re­cent failed coup at­tempt, Moody’s said over­all the chance of an even­tual bal­ance of pay­ments cri­sis had risen due to “the com­bi­na­tion of el­e­vated ex­ter­nal fi­nanc­ing needs, the rise of do­mes­tic po­lit­i­cal risk, and the per­sis­tence of geopo­lit­i­cal threats. ”

In ad­di­tion, it added, “The gov­ern­ment’s re­sponse to the un­suc­cess­ful coup at­tempt raises fur­ther con­cerns re­gard­ing the pre­dictabil­ity and ef­fec­tive­ness of gov­ern­ment pol­icy and the rule of law go­ing for­ward.” –

‘Turkey con­tin­ues to op­er­ate in a frag­ile fi­nan­cial and geopo­lit­i­cal en­vi­ron­ment.’

Rat­ing’s an­a­lyst Moody’s

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