ANKARA - International rating organization Standard and Poor's (S&P) upgraded Turkey's rating. Releasing a statement on Monday, S&P said that Turkey's country rating was upgraded from 'B-' to 'B'.
''The upgrade reflects the broad progress that the new government of Turkey has made under its IMF-supported program, albeit with delays and slippages,'' said S&P's credit analyst Ala'a Al-Yousuf.
He said, ''the debt burden has continued to decline, due to fiscal adjustment and a fall in real interest rates. This has strengthened confidence in lira assets and helped bolster the exchange rate and international reserves.''
Noting that Turkey's public sector debt was still high despite the decline, Al-Yousuf said that as the S&P, they expected the government to miss its primary surplus targets by about 0.5 percent of GNP in 2003 and 2004, but assumed that it would make sufficient progress elsewhere to maintain a positive market sentiment.
Al-Yousuf said that if the government persevered with the tough fiscal adjustment despite the upcoming local elections, the potential for rating improvements would be increased.
Al-Yousuf added, ''conversely, if real interest rates do not start declining in the near future, then the IMF-supported program will be in jeopardy, raising the risk of another financial crisis, and bringing the ratings under downward pressure.''
(MS-AÖ) 28.07.2003