Moody’s Investors Service has upgraded its outlook on Turkey’s sovereign credit ratings from stable to positive. The rating agency announced the move on
In December and September, S&P delivered two
More upgrades will follow should Turkey’s monetary "normalisation" policy (see bne IntelliNews' Turkey Outlook 2024) remain in effect.
The main driver of the outlook change to positive was the decisive change in Turkish economic policy, Moody’s noted in its statement.
The affirmation of the B3 ratings reflects the large accumulated imbalances in the Turkish economy which will take time and policy consistency to be unwound.
It also reflects a track record of institutional weakening over many years, which the change in policy stance during 2023 does not yet erase.
As regards Turkey’s default history, Moody’s has recorded at least one default event on bonds and/or loans since 1983.
Other positive indications that the new policy direction is yielding tangible results would include durably lower imports, in particular of consumer goods, and a further orderly switch to lira-denominated deposits.
Stability in the exchange rate combined with stronger capital inflows that would allow a faster-than-expected replenishment of the central bank's foreign-currency reserves would also be positive.
On the contrary,
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