First Published: 2018-03-08

Moody's downgrades Turkey's rating
Ratings agency says Turkey's institutions "faltering" after terror attacks, failed coup, unprecedented crackdown since 2016.
Middle East Online

Turkey's relations with key Western partners have worsened in recent years.

PARIS - Ratings agency Moody's downgraded its assessment of Turkey's ability to pay back its debts further into junk territory, citing concerns over monetary policy, reform delays and institutional strength.

Moody's said in a statement late Wednesday it was cutting Turkey's sovereign ratings to 'Ba2' from 'Ba1', with a stable outlook.

According to Moody's, Ba grade ratings are are judged to be speculative and are subject to substantial credit risk. The bonds issued under such ratings are thus judged by investors to be "junk".

Turkey has been seen terror attacks, a failed coup and an unprecedented crackdown since 2016 and Moody's said the country's institutions were "faltering" as a consequence.

"Faltering institutional strength is reflected in a broad range of adverse outcomes on the economic, financial and political front, despite strong near-term growth rates and healthy public finances," Moody's said.

It said the crackdown after the failed coup had resulted in an "undermining of the authority of the judiciary".

It accused the government of being mainly focused on "short term measures... to the detriment of effective monetary policy and of fundamental economic reform."

Moody's emphasised that inflation was still stuck in the double digits and, while growth remained strong, imbalances in the economy had been on the up.

It said while the risk of major financial trouble concerning a reversal in foreign capital inflows and a balance of payments crisis was "low", it had increased from a year ago.

Moody's also pointed to Turkey's involvement in Syria, where Ankara in January launched a major offensive against Kurdish militia.

Moody's said Turkey faced an "increased risk of an external shock ... given the country's wide current account deficits, higher external debt."

Amid the turmoil, Turkey's relations with key Western partners including the United States and the European Union have worsened in recent years.

Moody's said Turkery's rating was unlikely to improve on the short run -- so long as the country remained vulnerable to external risks.


Israel confirms it hit suspected Syrian nuclear reactor in 2007

Syrian rebels reach evacuation deal in Eastern Ghouta town

Abbas calls US ambassador to Israel 'son of a dog'

UN says Turkey security measures 'curtail human rights'

'Saudization' taking its toll on salesmen

Ahed Tamimi reaches plea deal for eight months in jail

UN launching final push to salvage Libya political agreement

Conditions for displaced from Syria's Ghouta 'tragic': UN

Sisi urges Egyptians to vote, denies excluding rivals

Rights Watch says Libya not ready for elections

Saudis revamp school curriculum to combat Muslim Brotherhood

American mother trapped in Syria’s Ghouta calls out Trump

Syria workers say French firm abandoned them to jihadists

Grim Nowruz for Kurds fleeing Afrin

Sarkozy back in custody for second day of questioning

Netanyahu says African migrants threaten Jewish majority

US Senate votes on involvement in Yemen war as Saudi prince visits

What a ‘limited strike’ against Syria’s Assad might mean

Natural gas in eastern Mediterranean fuels increasing tensions

Erdogan tells US to stop ‘deceiving’, start helping on Syria

IS controls Damascus district in surprise attack

French ex-president held over Libya financing allegations

NGO says Israeli army violating Palestinian minors’ rights

Human rights chief slams Security Council for inaction on Syria

US warns Turkey over civilians caught in Syria assault

Saudi crown prince keen to cement ties with US

Erdogan vows to expand Syria op to other Kurdish-held areas

Kurdish envoy accuses foreign powers of ignoring Turkish war crimes

Morocco authorities vow to close Jerada's abandoned mines

Israeli soldier sees manslaughter sentence slashed

Turkey insists no plans to remain in Afrin

Cairo voters show unwavering support for native son Sisi

Forum in Jordan explores new teaching techniques

Gaza Strip woes receive renewed attention but no fix is expected

Kurds, Syrian opposition condemn Afrin looting

36 jihadists killed in Egypt’s Sinai

Israel arrests French consulate worker for gun smuggling

Pro-Turkish forces loot Afrin

Israel prepares to demolish Jerusalem attacker's home

Saudi crown prince says his country to seek nuclear bomb if Iran does

Arab women artists in diaspora focus on identity and loss

Tunisia’s Central Bank targets inflation but may hurt growth prospects

Libya’s health system reflects a larger humanitarian crisis

Israel blasts Gaza underground tunnel

Abu Dhabi awards France's Total stakes in oil concessions