The decisions taken by the new economic management under the leadership of Minister of Treasury and Finance Mehmet Şimşek are bearing fruit.
Successive statements from international rating agencies Moody’s and Fitch and the decline in Turkey’s 5-year credit risk premium (CDS) revealed that an environment of confidence has been established in international markets.
Following all these developments after the election, the way was opened for banks and large companies in Turkey to find outsourcing.
“Almost all leading economies have put Turkey on their radar for investment.”
In his evaluation, Minister Şimşek said that confidence in the country is gradually increasing thanks to the rational program implemented in economic policies.
Drawing attention to the financing provided by banks in the last month, Şimşek said, “With the strengthening of trust in the government, the problems experienced in foreign financing are also being solved. VakıfBank, Yapı ve Kredi Bankası, Eximbank, Türkiye Sınai ve Geliştirme Bankası, Denizbank and İş Bankası attracted a high level of interest in the issues they issued in August and September. While, in the last month, a total of 2 billion 57 million dollars of financing was provided through the issuances of these banks of our country. There was interest in the issuances of these banks from a wide geography such as the UK, the Middle East, Europe, America and Asia-Pacific countries. Almost all the leading economies are in Turkey. It has put ‘on its radar for investment. Since June, our banking sector has provided foreign financing from abroad for a total of 10.4 billion dollars, including 6 billion 767 million dollars, our non-bank financial institutions 367 million dollars, and our real sector 3 billion 266 million dollars. This is “It is the clearest indicator of confidence in the country’s economy.” he said.
“We have set realistic targets to ensure price stability”
Şimşek pointed out that they received positive results from the contacts they made in the Gulf region following the economic trust environment created and the bilateral talks initiated under the leadership of President Recep Tayyip Erdoğan, and said, “Türk Eximbank, with the participation of 8 financial institutions from the Gulf region, under the coordination of ITFC, the trade financing institution of the Islamic Development Bank, with the aim of supporting Turkish exports.” “It obtained foreign resources worth 277 million dollars with a 1-year maturity.” said.
Expressing that investor interest in the real sector has increased, Şimşek stated that Arçelik also provided financing of 400 million dollars in the borrowing. Şimşek pointed out that Rönesans Holding also provided a loan of 781 million euros (approximately 834.4 million dollars) under the guarantee of UK Export Finance (UKEF) in July.
Emphasizing the importance of price stability, Şimşek said, “Price stability is a must for permanent prosperity, high growth, high employment, additional external resources. We have set realistic targets to ensure price stability. We will direct resources from consumption to exports and investment. Access to finance is appropriate to gain competitiveness.” “If we can permanently reduce inflation to single digits, our companies will have access to 5-10 year term resources from the world at reasonable costs. Then there will not be many countries in the world that can compete with Turkey.” made his assessment.
Stating that the Medium Term Program (MTP) also gives confidence to international markets, Şimşek said that the MTP has three basic components: fight against inflation, financial discipline and structural reform, and the fourth element of the program is external resources.
Fitch changed the rating outlook to ‘stable’
Following the steps taken in the economy, developments confirming the positive trend in the Turkish economy serve as a reference for international investors.
Recently, international credit rating agency Fitch Ratings confirmed Turkey’s credit rating as “B” and changed its rating outlook from “negative” to “stable” after 2 years.
Fitch stated that the revision of the outlook to “stable” reflects a return to a more traditional and consistent policy mix that reduces short-term macrofinancial stability risks and eases balance of payments pressures. Fitch’s decision was influenced by Turkey’s low general government debt compared to similar countries, its history of access to foreign markets and its manageable debt payment profile.
Moody’s raises growth forecast to 4.2
Moody’s also increased its growth forecast for the Turkish economy from 2.6 percent to 4.2 percent this year and from 2 percent to 3 percent for next year, confirming that the right policy sets were implemented.
In the Moody’s report, which emphasized that low public debt and prudent budget policies compared to peer countries reflect the effectiveness of fiscal policy, the solid structure of the Turkish banking sector was emphasized and it was underlined that the sector was able to renew its external debts even in times of financial stress.
CDS score fell below 400 basis points
The CDS score, which was around 700 points before the election, dropped below 400 basis points after the steps taken in the economy and the messages given in the OVP.