Standard & Poor’s revises Turkey outlook to stable from negative
Posted by meb at August 1st, 2008
Standard & Poor’s on Thursday revised its outlook on Turkey to stable from negative on the diminished near-term political uncertainty after the country’s top court’s decision not to ban the ruling Justice and Development Party (AKP). S&P affirmed the country’s credit rating at “BB-”.
“The stable outlook on Turkey balances the improvement in the republic’s external financing prospects and underlying fundamentals against its vulnerability to financing shocks,” S&P said in a statement.
“If the government continues to reduce the economy’s vulnerability to external financing shocks through continued reform and fiscal consolidation, the ratings on Turkey could improve,” the agency added.
Wednesday’s verdict eased months of political uncertainty, which has battered Turkey’s financial markets on fears that the democratically elected party would be closed down, halting economic and political reforms needed for Turkey to join the European Union.
“The resulting improved prospects for policy continuity and political stability will likely bolster investor confidence, widening the sources for the financing of Turkey’s large current account deficit,” S&P said
Turkey’s current account registered a deficit of 5.7 percent of GDP and 25 percent of current account receipts in 2007. Although net inward foreign direct investment offset 53 percent of the deficit, with portfolio equity making up for another 9.0 percent, external borrowing remained substantial.
source: Hurriyet daily
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