Standard And Poor's Affirms Its Ratings On Turkey

LONDON/ANKARA - Standard & Poor's, an international rating agency, affirmed its 'BB-' long-term foreign currency and 'BB' long-term local currency sovereign credit ratings on the Republic of Turkey.
Standard & Poor's Ratings Services said on Thursday that it affirmed its 'BB-' long-term foreign currency and 'BB' long-term local currency sovereign credit ratings on the Republic of Turkey.
''At the same time, the 'B' short-term foreign and local currency ratings on Turkey were affirmed. The outlook is stable,'' it said.
''Continued commitment to prudent macroeconomic policies firmly underpin the ratings on Turkey in the 'BB' category, and these policies are anchored by an expected new stand-by arrangement with the IMF and a timetable for talks on EU accession,'' Standard & Poor's said.

Standard & Poor's, an international rating agency, said on Thursday, ''continued commitment to prudent macroeconomic policies firmly underpin the ratings on Turkey in the 'BB' category, and these policies are anchored by an expected new stand-by arrangement with the IMF and a timetable for talks on EU accession.''
Standard & Poor's affirmed its 'BB-' long-term foreign currency and 'BB' long-term local currency sovereign credit ratings on the Republic of Turkey. At the same time, the 'B' short-term foreign and local currency ratings on Turkey were affirmed. The outlook is stable.
Releasing a statement, Standard & Poor's said, ''economic and fiscal performance were very strong in 2004, and are expected to remain so in the medium term as high levels of investment, aided by falling real interest rates, and increased factor productivity enhance the economy's output capacity.''
''Turkey has achieved a primary surplus of 6.5 percent of GNP in each of the past two years, and is expected to maintain a similar degree of fiscal discipline in the next three-year period. As a result, general government debt as a percentage of GDP is expected to fall steadily in the medium term,'' it said.
Standard & Poor's noted, ''the ratings on Turkey remain constrained, however, by structural weaknesses in government revenues and expenditures, including the still-high debt burden and interest payments. The ratings are also constrained by a large current account deficit which is financed mainly by external debt, reinforcing Turkey's vulnerability to external financing conditions. Further reforms are needed to strengthen the structure of revenues and boost foreign direct investment.''
''In the context of the government's continued large parliamentary majority, the progress on accession talks with the EU and expected IMF support for Turkey's economic program are creating a strong platform for future rating improvements. Sustained fiscal consolidation and a continued downward trend in the public debt burden will be important indicators for likely improvements of the ratings in the medium term. It is also expected that private sector capital inflows, in particular, should benefit from greater political and economic stability and the government's EU accession strategy, securing the funding of Turkey's growing external financing gap. Conversely, severe policy slippage that jeopardizes current macroeconomic achievements, adherence to the economic program, and EU talks, would place the ratings under renewed downward pressure,'' it added.