Public finances are a source of strength for Turkey's sovereign creditworthiness, the global credit agency Moody's said Friday.
Turkey's credit profile balances resilient growth and strong public finances against political risk and external vulnerability, the agency said in its annual credit analysis report for Turkey.
Turkey's credit profile reflects its large and flexible middle-income economy, resilient growth and favorable demographics, the report said.
'Although Turkey's public finances have deteriorated marginally over the past year due to fiscal stimulus and the weaker lira, the country's resilient economic growth and manageable government debt metrics continue to provide key credit anchors,' Kristin Lindow, a Moody's Senior Vice President and co-author of the report, said in a statement.
Moody's said it expects government debt-to-GDP ratio in Turkey to stay below 30 percent next year.
However, the report said fiscal outcomes will likely be challenged in an environment of rising global interest rates.
Moody's warned that Turkey's credit rating could be downgraded if there is sustained lower growth, worsening in fiscal strength, and erosion in institutional strength.
Turkey's credit rating could be upgraded if there are structural reductions in vulnerabilities, such as balance-of-payments pressures, or improvements in Turkey's institutional environment or competitiveness.
Moody's kept Turkey's credit rating unchanged at 'Ba1' on March 18, but revised down its outlook to 'negative' from 'stable.'
The agency said Friday's report does not constitute a rating action for Turkey.
By Ovunc Kutlu in New York
Anadolu Agency
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