Standard & Poor’s revised Turkey’s outlook to positive from stable, while affirming BB- long-term foreign currency rating. Farouk Soussa, credit analyst with the rating agency, said that the outlook revision reflects the government’s continued commitment to prudent macroeconomic policies. Positive trends in the economy are expected to continue in the medium-term as macroeconomic prudence will be anchored by the new IMF agreement and EU accession talks, according to S&P. On the other hand, Turkey’s continued vulnerability to financing shocks, marked by short maturity structure of borrowing and widening current account deficit constrain the ratings on the country.
S&P noted that continued fiscal consolidation and progress on structural reform, particularly social security reform, would have a positive effect on the ratings. On the other hand severe policy slippage and any major threat to the ongoing EU accession talks would put a downward pressure on the ratings. According to the rating agency, avian influenza presents a short-term risk for the rating agency, but if the outbreak of the human variety of avian flu in Turkey reaches epidemic proportions, it would have medium-term adverse effects on Turkey’s economy and finances.