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Turkey’s possible downgrade hinges on Erdoğan’s policies, Moody’s says

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International credit rating agency Moody’s said on Tuesday that a review on a possible downgrade of Turkey’s sovereign credit rating will hinge on what policies the country’s government pursues following President Recep Tayyip Erdoğan’s re-election victory this week, Reuters reported.

“Turkey’s rating review announced earlier in June will focus on the incoming government’s capacity and intention to implement policies that would promote sustainable growth and protect the government’s fiscal strength,” Moody’s said in a statement.

“Such policies will be key to restoring confidence in the economy and provide greater assurance of Turkey’s ability to obtain the requisite funding for its large current account deficit and to meet its external repayment requirements.”

Moody’s also stressed that the local elections in March 2019 would suspend reforms on economy.

The global rating agency had also announced on June 2 that Turkey’s Ba2 ratings could be at risk due to a lack of clarity about what direction economic policy will take, given its external vulnerabilities, “that will, if sustained, raise the risk of severe pressures on Turkey’s balance of payments to a level that is no longer consistent with the current rating,” the Financial Times reported.

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