Moody's downgrades Turkey rating to B1, ministry challenges move
(Adds ministry response, quotes, details)
ISTANBUL, June 14 (Reuters) - Moody's cut Turkey's sovereign
credit rating deeper into "junk" territory on Friday, saying the
risk of a balance of payments crisis continued to rise, and with
it the risk of a government default.
Moody's downgraded the rating to B1 from Ba3 and maintained
a negative outlook. It had previously cut the rating to Ba3 from
Ba2 in August last year.
Soon after the latest move, the Turkish Treasury and Finance
Ministry said the downgrade was not in accordance with the
country's economic indicators.
"The decision does not conform with the Turkish economy's
fundamental indicators and thus creates question marks about the
objectivity and impartiality of the institution's analyses," it
said in a statement.
It then listed economic indicators in comparison with other
emerging market economies and cited developments such as falling
inflation and rising tourism revenues and said: "we sadly see
that very positive developments are being ignored."
Moody's said the continued erosion in institutional strength
and policy effectiveness on investor confidence was increasingly
outweighing Turkey's traditional credit strengths including its
large, diverse economy and the low level of government debt.
"It remains highly vulnerable to a further prolonged period
of acute economic and financial volatility," the statement said,
adding that foreign exchange reserve buffers are weak.
It said most measures taken by the government continue to be
focused on the near-term priority of propping up economic
activity at the expense of eroding the underlying resilience of
the economy and its banking system to external shocks.
Moody's said external pressures are exacerbated by the row
between Turkey and the United States over Ankara's purchase of
S-400 missile systems from Russia.
"The sanctions which the U.S. Congress will consider if the
purchase goes ahead, while largely undefined to date, cast a
further shadow over Turkey's economy and financial system," it
(Reporting by Daren Butler
Editing by Sonya Hepinstall and James Dalgleish)
First Published: 2019-06-14 23:06:28
Updated 2019-06-14 23:47:06
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