By Stephen Nakrosis
S&P Global Ratings said it was lowering its outlook on Turkey to negative from stable, while affirming the country’s unsolicited ‘B/B’ long- and short-term sovereign credit ratings.
The outlook reflects risks to the nation’s creditworthiness “from what we consider untenable monetary, financial, and economic policy settings.” S&P also said “in our view, contingent liabilities from state banks and public enterprises are large and growing, while balance-of-payments and exchange-rate vulnerabilities remain elevated.”
Broader public sector risks are increasing for Turkey, according to S&P, “including the ‘KKM’ scheme, under which the central bank and treasury committed themselves to compensate depositors for any exchange rate related losses on an estimated 9.3% of GDP in foreign currency-linked savings.”
Turkey’s fiscal, economic, and monetary analysis is being complicated by unrestrained inflation. S&P said.
Write to Stephen Nakrosis at stephen.nakrosis@wsj.com
(END) Dow Jones Newswires
03-31-23 1715ET
