Fitch lifts Turkish credit rating, cites better outlook

PARIS (AFP) – The international ratings agency Fitch said yesterday it had raised several of its credit ratings on Turkey, citing the country’s prospects of political stability and economic policy discipline. Fitch said its long-term foreign currency and local currency ratings had been raised from BB-minus to B-plus, adding that it had maintained its short-term assessment at B. At the same time, the rating on Turkey’s debt ceiling was upgraded to B-plus from BB-minus. «The upgrade is driven by prospects for continued policy discipline, underpinned by domestic political stability, the adoption of a new International Monetary Fund reform program and the approach of European Union accession talks scheduled for October 2005,» the agency said. Nick Eisinger, head of Fitch’s Sovereign Group, said structural reform and budget deficit reductions should «encourage more predictable and sustainable growth.» «But there are formidable hurdles ahead and the government will have to make tough decisions,» he warned. Fitch noted that the general government budget deficit is expected to drop to 6 percent of gross domestic product this year, down from 8 percent in 2004. Growth in 2005 year is forecast at 6.8 percent. The agency said its ratings upgrade also reflected central bank success in lowering inflation, which came to 9.3 percent in 2004, below the official target for the third year in a row. It added that the 8 percent inflation target for 2005 is «challenging but achievable.»