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Moody’s Investors Service cut its assessment on Turkey’s credit score, citing an increasing risk of a balance of payments crisis and a government default. Turkey’s long-term issuer rating was lowered to B1 from Ba3, the rating company said in a statement on June 14.

Moody’s decision to downgrade Turkey’s credit rating is incompatib­le with the country’s fundamenta­l economic indicators, the Ministry of Treasury and Finance said early on June 15. The move by the credit ratings agency “raises questions about its objectivit­y and neutrality”, the ministry said in a statement.

The outlook on the rating is negative, making Turkey four notches below investment grade, on par with Jordan, Greece, and Uzbekistan.

“The sanctions which the U.S. Congress will consider if the planned purchase [of the S-400 Russian missile system] goes ahead, while largely undefined to date, casts a further shadow over Turkey’s economy and financial system,” Moody’s noted. “Foreign exchange reserve buffers are weak and Moody’s expects them to weaken further over the next two years relative to economy-wide short-term liabilitie­s.”

Referring to Moody’s assessment that Turkey’s debt is 2.6 times its reserves, the ministry said the same agency rated other developing countries with worse ratios with higher grades.

The ministry also said it regrets that many positive developmen­ts which show a clear sign of a recovery in the country’s economy are being ignored, including the completion of recapitali­zation of state lenders, the downward trend in inflation and an increase in tourism income.

It said the credit rating agency also “unfairly” criticized the independen­ce of institutio­ns and the free market in Turkey.

Turkey’s main economic policy since 2003 has been to follow free market principles under any circumstan­ces, the statement added.

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