Akbank: Rating companies not fair toward Turkey
Posted by meb at February 5th, 2008
Akbank General Manager Zafer Kurtul has said credit rating agencies such as Fitch and Standard & Poor’s (S&P) fail to reflect Turkey’s real wealth and economic well being in their credit score assessments.
The ratings are much lower than what Turkey really deserves, Kurtul noted. He used the word “inequitable” to define the approach of the credit rating agencies, which most of the time label the Turkish economy as stagnant.
In an interview with Today’s Zaman last week, Kurtul stated that Turkey’s performance in the last five years has been very good and that the economy has improved significantly, but that its score from credit rating agencies has not shown a corresponding increase. “The factors that determine the credit rating are the current account deficit, the situation of public debt and the growth rate of the economy. My country has seen a tremendous advance in all of these elements, and it has achieved distinctive success on a global scale in terms of growth rates. Despite all these positive factors, our credit rating is still too low,” Kurtul said.
As of the end 2007, Fitch raised Turkey’s credit rating from BB- to BB but said the “economy remains stagnant.” Another major rating agency, S&P, left Turkey’s long-term score unchanged at BB-. According to Moody’s, Turkey’s credit score was BA3 and it appeared stagnant. Japan’s credit rating agency JCR also set Turkey’s rating at BB- and changed its status from positive to stagnant.
Kurtul praised the political and economic stability of the last five years, underlining that this has earned Turkey a more respectable position in the world economy. Yet he also warned that apathy would turn the whole positive picture upside down. He noted that the government has to maintain its determination on continuing with reforms to ensure the stability of the economy.
Kurtul also urged the government to take tough measures to solve the current account deficit and domestic debt issues in this term. Attracting more foreign direct investment will be a key tool in eradicating the current account deficit, and privatizations are of utmost importance in this endeavor, he noted. “Indeed, there is a considerable accumulation of wealth in the Gulf region and in some Asian countries. Similarly, there are these billion-dollar sovereign wealth funds. With the right regulations and incentives, I believe we can attract them to our country,” said Kurtul.
source: Today’s Zaman
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