Reuters Istanbul
Turkey stepped up its criticism of credit rating agencies yesterday, with President Tayyip Erdogan warning it could cut ties with Moody’s Investors Service and Fitch and his prime minister saying the country did not have the ratings it deserved.
Both Moody’s and Fitch have warned in recent weeks of the potential impact of continued political uncertainty following former prime minister Erdogan’s August 10 victory in the country’s first direct presidential election.
Local media quoted Erdogan as telling reporters on his plane back from a visit to Qatar late on Monday that such statements were politically motivated rather than based on assessments of the economy.
“We stopped co-operating with Standard & Poor’s [S&P] and if they continue on this path, I can tell the prime minister to stop co-operation with these two [Moody’s and Fitch] also,” the Hurriyet daily quoted Erdogan as saying, although he added such a point had not yet been reached.
S&P said last year it had failed to reach a deal to offer a full rating for Turkey and would only issue “unsolicited” assessments – meaning it is not paid by Turkey to provide coverage but does so anyway to meet investor needs.
The country was angered in May 2012 when S&P cut the outlook on its sovereign rating to stable from positive. Erdogan warned Ankara might stop “recognising” the agency, calling its decision “ideological”.
Prime Minister Ahmet Davutoglu said Turkey did not have the ratings it deserved and that agencies had not taken into account greater stability after last month’s election.
Deputy Prime Minister Ali Babacan, who is responsible for overseeing the economy, joined the chorus, telling a finance conference in Istanbul that objective evaluation from the credit rating agencies was crucial for Turkey.
Fitch, which rates Turkey BBB- with a stable outlook, said last Thursday that the central bank might face growing political pressure to cut interest rates despite rising inflation in the run-up to a general election in June next year.
Moody’s, which rates Turkey Baa3 with a negative outlook, warned last month that uncertainty would persist, along with credit challenges.