LONDON/ANKARA - International credit rating institution Standard and Poor's raised on Thursday long-term foreign and local currency sovereign credit ratings of Turkey to B+ from B.
At the same time the B short-term foreign and local currency sovereign credit ratings on Turkey were affirmed. The outlook is stable.
Standard and Poor's credit analyst Ala'a Al-Yousuf said that ''the upgrade reflects the significant process that the government has made toward meeting the year-end 2003 financial targets under its IMF-supported program and its commitment to continue implementing the program in 2004.''
Al Yousuf said that ''if the government perseveres with the tough fiscal adjustment despite the local elections due in April 2004 and the expiry of the IMF program at year-end 2004, the potential for rating improvements will be increased.''
''Conversely, if it abandons the discipline of the program, the ratings will come under downward pressure,'' he added.
''The government debt burden is expected to continue declining as a result of continued ambitious fiscal adjustment and a fall in real interest rates. Confidence in lira-denominated assets has also grown, and the exchange rate and international reserves have strengthened...Although public sector debt is projected to decline further in 2003, it will remain high at just over 70 percent of Gross Domestic Product at year-end 2003 and year-end 2004.''
''Despite the government's repeated declarations of its commitment to the IMF-supported program and its huge parliamentary majority, it has faced difficulties in adhering to its fiscal and structural reform pledges fully and in a timely manner,'' said Al Yousuf.
He added that the current account is expected to record wider deficits of about 3 percent of GDP in 2003 and 2.6 percent in 2004, but the floating exchange rate regime and the cushion of official international reserves significantly mitigate the risk of another crisis.
(ÖŞ) 16.10.2003