New S&P Turkey rating 'incomprehensible': Econ. min.

Türkiye Materials 21 July 2016 02:00 (UTC +04:00)

One agency’s “rush” to downgrade Turkey's credit rating is incomprehensible, and macroeconomic indicators should also be factored into credit rating decisions, Economy Minister Nihat Zeybekci said Wednesday, Anadolu reported.

Zeybekci's comments came after international rating agency Standard & Poor's downgraded Turkey's main sovereign rating from BB+/B to to BB/B in the wake of last week’s failed coup, though it had only a minor economic impact.

"Standard & Poor's rush to downgrade Turkey's credit rating to BB with a negative outlook is incomprehensible," Zeybekci tweeted late Wednesday.

"We believe that macroeconomic indicators should also be factored into credit rating decisions," he added.

He said the government will soon introduce legislation to streamline investments, production, and exports in the country.

"As always, Turkey will take necessary steps both in the financial sector and the real economy," he also tweeted.

The credit ratings agency had failed to reach a rating agreement in 2013 with Turkish Treasury, since then, it only issue an “unsolicited” assessment—meaning that it is not paid by the country to provide cover.

- Public debt stock

Fiscal discipline, meaning the government’s capacity to maintain smooth financial operations and long-term fiscal health, and a tight fiscal policy have contributed substantially to disinflation, as well as to Turkey’s strong growth performance for last 14 years.

Turkey’s gross domestic product rose 4.8 percent in the first quarter of 2016 compared to the same period last year, making Turkey one of the fastest-growing economies in Europe and among Organization for Economic Cooperation and Development (OECD) members.

The country also has made great progress in restructuring its financial sector, as well as in improving public sector governance and its business environment.

Turkey has reduced its debt stock. One of the best performers among the European economies in reducing government debt, its debt stock ratio has been meeting the EU's Maastricht Criteria, 60 percent, since 2004.

Public debt stock fell from 74 percent of GDP in 2002 to 33.5 percent of GDP in 2015, less than half of Germany's public debt stock, according to Eurostat.