ECONOMY

Turkish credit rating safe

NEW YORK (Reuters) – Turkey’s delay in reaching an accord with the United States to allow military deployment from its soil will not affect its sovereign debt ratings, international credit rating agency Standard & Poors said yesterday. The agency ranks Turkey’s long-term foreign and local currency at B-minus and the country’s short-term foreign and local currency at C. The ratings outlook is stable. On March 1, the Turkish Parliament narrowly defeated a government motion to allow US troop deployment from Turkey in exchange for increased US aid. But an election is scheduled for Sunday, and Standard & Poors expects the new government to resubmit the motion and approve it. «The very narrow defeat on March 1 of a government motion to allow the deployment of US and Turkish troops into northern Iraq was a surprise but it is only expected to delay the eventual approval,» said Ala’a Al-Yousuf, director of sovereign ratings for the Middle East and Africa at Standard & Poors. If Turkey approves the deployment, the US would reward Turkey with an aid package estimated at $24 billion, Standard & Poors said. This would reduce the government’s borrowing requirements, and thereby lead to lower interest rates. The Turkish government also has begun a plan with the International Monetary Fund to reach growth targets in gross national product and public sector surplus. This would strengthen government finances and market confidence. Turkey’s economy is highly vulnerable, but Turkish markets have so far reacted calmly to recent events, Standard & Poors said. «As always, the path of real interest rates in Turkey – and hence prospects for reducing public debt – will depend, in part, on the government’s ability to maintain domestic political stability,» Al-Yousuf said.