By Stephen Nakrosis
Moody's Investors Service on Friday said it was lowering the Government of Turkey's long-term foreign- and domestic-currency issuer and the foreign-currency senior unsecured ratings to B3 from B2.
Moody's cited rising pressures on the country's balance of payments and the fact that "authorities are having to resort to increasingly unorthodox measures in an attempt to stabilize the currency and restore foreign-currency buffers."
According to Moody's, the country's external position is "under greater-than-expected pressure, mainly as a result of surging energy prices, which are pushing up already high inflation and raising external financing needs." Declines in foreign-currency reserves are a further pressure point, Moody's said. The agency also cited inflation, which rose to 79.6% in July, and is now among the highest levels reported globally. The Turkish lira has lost around 30% of its value against the U.S. dollar this year, the agency said.
Moody's also said it was raising its outlook of Turkey to stable, reflecting its view that the risks at the B3 level are balanced. Moody's also said that "while the authorities' highly unorthodox economic policies will likely exacerbate the current economic imbalances, the sovereign has relatively low external debt and moderate refinancing needs for the remainder of the year and next year."
The agency said it forecasts real GDP growth of 4.5% in 2022 and 2% in 2023, and added, "the risk of a sharper slowdown is material."
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(END) Dow Jones Newswires