S&P raises Turkey’s debt rating on improved outlook

PARIS (AFP) – US credit rating agency Standard and Poor’s said yesterday it was raising its rating on Turkey’s debt because of the growing likelihood the country would meet targets set out in a plan by the International Monetary Fund. «The upgrade reflects the significant progress that the government has made toward meeting the year-end 2003 financial targets under its IMF-supported program, and its commitment to continue implementing the program in 2004,» said Standard and Poor’s credit analyst Ala’a Al-Yousuf in a statement. «The government debt burden is expected to continue declining as a result of continued ambitious fiscal adjustment and a fall in real interest rates. Confidence in lira-denominated assets has also grown, and the exchange rate and international reserves have strengthened,» Al-Yousuf said. S&P raised its rating on long-term debt in Turkish lira and other currencies to B plus, up a notch from B. However, the country’s debt rating still has a considerable way to go before the credit rating agency considers its debt to be of investment grade, or BBB. «If the government perseveres with the tough fiscal adjustment despite the local elections due in April 2004 and the expiry of the IMF program at year-end 2004, the potential for rating improvements will be increased,» said Al-Yousuf. Speaking at the end of an IMF mission to the country, Reza Moghadam, the head of IMF’s Turkey desk, told a news conference Wednesday that the IMF executive board could meet in November to discuss the release of the loan’s next tranche.