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S&P raises Türkiye’s credit rating to BB- amid economic stabilization

S&P raises Türkiye’s credit rating to BB- amid economic stabilization Standard & Poor's building. (AFP Photo)
By Newsroom
Nov 2, 2024 1:33 AM

Standard & Poor’s (S&P) announced on Friday that it has upgraded Türkiye’s long-term sovereign credit rating from B+ to BB-, assigning a stable outlook. The upgrade reflects a favorable shift in Türkiye’s economic outlook amid tighter monetary policies and reduced reliance on foreign savings.

The rating agency attributed the improved rating to the Central Bank of the Republic of Türkiye’s (CBRT) commitment to a stringent monetary stance, which it said has played a crucial role in stabilizing the Turkish lira, controlling inflation, rebuilding foreign currency reserves, and advancing a shift away from dollar-denominated assets in the financial sector.

“The Central Bank of the Republic of Turkiye’s (CBRT’s) tight monetary stance has enabled Turkish authorities to stabilize the lira, bring down inflation, rebuild reserves, and de-dollarize the financial system,” S&P said in a statement.

According to S&P, Türkiye’s current account deficit has significantly narrowed, falling by about four percentage points of the gross domestic product (GDP) since 2022. The agency highlighted that this adjustment marks a reduction in Türkiye’s savings gap with other economies, indicating an improvement in the nation’s economic fundamentals.

The agency’s stable outlook suggests balanced risks over the coming year as Turkish authorities work to curb inflation, address wage expectations, and steer the economy toward stability. S&P also expressed confidence in Türkiye’s economic team and its adherence to tight monetary policy but noted potential implementation challenges associated with the government’s medium-term program.

Last Updated:  Nov 2, 2024 1:33 AM