Ja­pan Credit Rat­ing agency af­firms Turkey’s rat­ing

Daily Sabah (Turkey) - - Money -

A KEY Ja­panese credit rat­ing agency on Fri­day main­tained both the long-term for­eign and lo­cal cur­rency rat­ings of Turkey at BBB- on the in­ter­na­tional scale with a sta­ble out­look.

In a re­port, the Ja­pan Credit Rat­ing Agency (JCR) said: “The rat­ings are sup­ported by the coun­try’s largest eco­nomic base in the Mid­dle East, fi­nan­cial sound­ness of the bank­ing sec­tor and re­strained level of gov­ern­ment debt.”

How­ever, the JCR said the rat­ings were con­strained by macroe­co­nomic im­bal­ances in the coun­try’s low sav­ing rate and chronic cur­rent ac­count deficit, large ex­ter­nal fi­nanc­ing needs, de­pen­dence on in­ter­na­tional fi­nan­cial mar­kets, and po­lit­i­cal and so­cial con­di­tions that need fur­ther im­prove­ments.

It said that the po­lit­i­cal con­di­tions and eco­nomic ac­tiv­i­ties had been re­cov­er­ing since Turkey’s April 16 ref­er­en­dum on changes to the coun­try’s con­sti­tu­tion, which will usher in an ex­ec­u­tive pres­i­den­tial sys­tem.

Ac­cord­ing to the re­port, Turkey’s do­mes­tic po­lit­i­cal con­di­tions will main­tain the sta­tus quo and the econ­omy will con­tinue to grow moderately un­til the gen­eral elec­tions sched­uled for Novem­ber 2019. “It [the JCR] will closely mon­i­tor whether the gov­ern­ment will ac­cel­er­ate struc­tural re­forms to cor­rect the macroe­co­nomic im­bal­ances on the ba­sis of a strength­en­ing power base,” the re­port said.

It said the Turkish econ­omy was pro­jected to grow at 5 per­cent in 2017, and at 4 per­cent for the next two years, mainly due to the fad­ing of stim­u­lus mea­sures.

For­eign cap­i­tal trans­ac­tions have turned into a net in­flow and the Turkish lira has sta­bi­lized since the be­gin­ning of 2017, with the back­ing of the cen­tral bank’s mon­e­tary pol­icy, the JCR said.

In ref­er­ence to the ex­ter­nal debts of the coun­try’s bank­ing sec­tor, the JCR said: “How­ever, banks are mak­ing progress on rolling over its ex­ter­nal debt with longer ma­tu­rity and their net open for­eign ex­change po­si­tion is kept re­strained at 1.3 per­cent of their equity cap­i­tal un­der the mon­e­tary au­thor­ity’s reg­u­la­tions.”

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