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Fitch Increased Türkiye’s Credit Rate

The recent upward revision of Türkiye’s credit rating by Fitch has sparked numerous debates and discussions within financial circles, holding important implications for Türkiye’s economic status. In this article, we will delve into the details of Türkiye’s position in the global market, analyzing the factors driving changes in credit ratings and exploring the reasoning behind Fitch's decision.


Fitch Ratings indicate that Türkiye's current economic policy pivot is deemed “more durable.” This phrase, echoed by several directors and analysts, amplifies hopes for a positive trajectory in Türkiye’s credit rating.


What are Fitch Ratings?


Fitch Ratings provide assessments on a country’s future economic state, particularly regarding its ability to fulfill financial obligations. Moreover, Issuer Default Ratings (IDRs) are assigned to corporations and financial institutions, often encompassing recovery expectations and possible modifications above or below the issuer’s rating level. These ratings are assigned to both secured and unsecured debt securities, as well as loans. Credit ratings indicate the likelihood of repayment in accordance with the terms of insurance, sometimes incorporating additional considerations. The IDR ranges from “AAA” to “D,” including nine stages in between, reflecting varying degrees of repayment capability.


The Significance Of The Rating For Türkiye

Türkiye's economic instability, characterized by high volatility, places emphasis on issues like credit rating and inflation. The nation has faced numerous hurdles in its pursuit of a better economy, including high inflation rates, political problems, and a substantial current account deficit. These factors have influenced the credit ratings, resulting in a decrease.


“Regarding the effectiveness of the policy shift, improving reserve levels, reducing contingent liability in terms of effects of protected deposits without increasing dollarization, reducing the current account deficit, and easing inflation expectations, these developments warrant the rating that we took on Friday,” Erich Arispe Morales told Anadolu. He also mentioned the credit rating upgrade from "B" to "B+".

Fitch Ratings underscore Türkiye’s current economic policy pivot as “more durable”, and this phrase has sparked optimism among directors and analysts, creating hope for improved credit ratings. This marks a significant turning point for Türkiye, displaying the efforts the nation has made in enhancing its financial outlook as well as decreasing economic volatility. The upgraded credit rating has facilitated Türkiye's access to international markets, enabling borrowing at lower interest rates and fostering economic expansion.


What impacted the decision?

One of the key figures in the decision to elevate the country's credit rating is the government of Türkiye, which pursued economic reforms and different disciplines to improve the country’s credit rate. By implementing policies, the government laid the groundwork for an increase in the credit rating, such as controlling government spending and attracting foreign investments. Additionally, the Central Bank’s role in maintaining financial stability and managing monetary policies affected the increase in the credit rate of Türkiye, while decisions like raising interest rates contributed to this outcome.


External factors, including global economic conditions and geopolitical tensions, also exert influence on credit ratings. For instance, changes in oil prices and trades between economies affect the rating.


In conclusion, Fitch’s decision to elevate Türkiye’s credit rating signifies development that reflects the progress Türkiye has made in enhancing its economic fundamentals. This decision reflects the country's efforts to mitigate financial volatility, attract foreign investments, and foster economic growth.


Works cited

“Türkiye’s Economic Policy Pivot Is “More Durable,” Says Fitch Ratings Analyst.” Aa.com.tr, 2024.

‌Fitch Ratings. “Rating Definitions.” Fitch Ratings.

“Turkiye Ratings & Research.” Fitch Ratings.

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