Moody's praises Türkiye's new economy policy, expects increase in credit rate

Türkiye's new economic administration is committed to reducing inflation and external imbalances, and the country's outlook, which is stable, could turn positive, Moody's has said.

In a statement on Tuesday, the rating agency said Türkiye "has pledged a return to more orthodox economic policies" after President Recep Tayyip Erdogan's re-election in May.

The agency kept Türkiye's credit rate at B3 stable, which is considered speculative and risky.

It said: "The new economic team has committed to bringing down inflation, reducing Türkiye's large external imbalances and ensuring fiscal discipline, and has started to gradually correct the direction of monetary and fiscal policy.

"The shift towards more orthodox, rules-based and predictable policymaking is credit positive, and comes earlier than we had expected."

It also noted that the country's central bank has started to return to a more orthodox monetary policy setting, increasing the policy rate from 8.5% to 17.5% in two meetings gradually.

Moody's said the bank is expected to continue tightening steps.

Following the statement by the agency, Mehmet Simsek, the Turkish treasury and finance minister, said "We are committed to implementing rule-based policies in line with international norms to ensure macro-financial stability and enhance our resilience against shocks," on his Twitter account.

"We believe this will reflect on our credit rating," he added.

Along with the appointment of Mehmet Simsek as the minister, Türkiye’s economic landscape is set to undergo significant transformations.