TOKYO/ANKARA - JCR has affirmed the ratings simultaneously revised their outlook on the following bonds and newly assigned a rating to Domestic Currency Long-term Senior Debts.
JCR issued a statement and said Turkey's B+ (single B plus) could be upgraded in case progress is recorded in structural reforms as a result of seventh review carried out with the IMF.
The statement said, ''in Turkey, political instability had posed a serious bottleneck in carrying out structural reforms in recent years. However, the current government has implemented the economic reform program agreed with the IMF along with its own reform packages geared to the country's EU membership by virtue of its strong political power base. As for the economic program, the government has obtained and IMF approval of the sixth review last December following the approval of the fifth review in August. The country has perseveringly carried out its structural reforms, improving its internal and external confidence and lowering inflation expectation. It has succeeded in realizing a virtuous circle of subdued inflation expectation and falling real interest rates, which in turn have spurred private consumption and investment.''
The statement said, ''in addition, Turkey has attained sustained growth of exports, supported by the appreciation of the euro and the enhanced price competitiveness of its export goods. As for the fiscal reform, a core element in the IMF brokered economic reform program, the government is seen to have almost achieved the target of bringing the public-sector primarily surplus to 6.5 percent of GNP in 2003.''
The statement said, ''If Turkey can firmly maintain its stance of implementing the reforms, attain the same 6.5 percent primarily surplus in 2004 and report a reasonable size of primarily surplus in the succeeding years, it will be able to continuously improve internal and external confidence, further lower the real interest rates and keep them stable at low levels.''
The statement said, ''in its consideration of these factors that JCR has decided to revise its rating outlook of Turkey's foreign currency long-term bonds from stable to positive. JCR will start considering a further upgrading of the rating if progress in the structural reforms, the result of the IMF's seventh review of the economic reform program and stable macroeconomic growth can be confirmed in the future. On the other hand, JCR deems it necessary to closely watch the following three factors: 'firstly, the influence of the development of current account deficit against the Turkish Lira and the interest rates, secondly the Cyprus issue and its possible impact on Turkey's EU membership and the influence that the political situation in Iraq may have on Turkey.''
(AY-AÖ) 12.03.2004