Turkey warns credit agencies over ‘political’ assessments

Agence France-Presse
Turkey warns credit agencies over ‘political’ assessments
Political risks should not weigh on Turkey's credit rating, Turkish President Recep Tayyip Erdogan argues

ANKARA, September 16, 2014 – Turkish President Recep Tayyip Erdogan has threatened to cut off ties with rating agencies Moody’s and Fitch if they keep making what he called politically motivated assessments, local media reported Tuesday, September 16.

The two leading credit ratings agencies have both warned that the lack of political stability after the August 10 presidential elections risks harming the Turkish economy.

Erdogan accused the agencies of adopting a “political” approach to assessing Turkey’s economic outlook and warned it could cut off relations with them as it did rival ratings agency S&P.

“We stopped our cooperation with Standard’s and Poor’s. If (Moody’s and Fitch) continue to act the same, I will tell the prime minister to cut ties with these two also,” he was quoted as saying by the Hurriyet newspaper.

“There is no economic risk ahead of Turkey. Such assessments are lacking economic or scientific ground,” he said, adding that the agencies had “acted the same in the past.”

S&P now makes only “unsolicited” assessments on Turkey – meaning it is not paid by the government – after its decision to downgrade the country’s credit rating in 2012 sparked an angry response from Ankara.

Before ascending to the presidency, Erdogan had dominated Turkey’s political scene as prime minister for 11 years, and his Justice and Development Party (AKP) presided over strong economic growth.

But external factors, including the chaos in neighbors Syria and Iraq and a pullback in liquidity by major central banks such as the US Federal Reserve, have hurt its growth more recently.

Fitch, which rates Turkey as BBB- with a stable outlook, said that while the economy had been “remarkably resilient” to recent economic shocks, “political risk will weigh on Turkey’s ratings.”

And Moody’s noted that gross domestic product (GDP) per capita had almost doubled since the AKP came to power in Turkey, but warned “maintaining that momentum will be difficult.”

“Looking ahead, the risks remain skewed to the downside,” added the agency, which has a Baa3 rating on Turkey with a negative outlook, meaning it may be cut.

On Tuesday, Prime Minister Ahmet Davutoglu urged rating agencies to be “objective” while making assessments on Turkey.

“Whomever you ask in internal and external markets, these agencies have not made objective decisions on Turkey,” he said. – Rappler.com

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