TODAY’S – Minister: Ankara does not care about Moody’s

Minister: Ankara does not care about Moody’sEconomy Minister Nihat Zeybeki has said the country andquotdoesnand#39t careandquot about the comments of credit rating agency Moodyand#39s, claiming that they were unwillingly forced to revise Turkeyand#39s economic forecast.President-elect Recep Tayyip ErdoIanand#39s victory in Sundayand#39s vote did not resolve the countryand#39s credit challenges, Moodyand#39s said, and warned that the countryand#39s outlook and political landscape was likely to remain uncertain until the conclusion of the general elections, set for June 2015.

Known to be a loyalist of ErdoIan, Zeybeki said on Saturday that Turkeyand#39s economy will improve with the new president, and accused Moodyand#39s of having a different agenda andquotWe know who you are working for,andquot Zeybeki said about the credit rating agency. He claimed that Moodyand#39s is concerned that the Turkish people will pay less interest and that the country will be less dependent on andquotcertain circles.

andrdquo The minister said none of Moodyand#39s nine warnings about Turkey is correct and that Ankara does not care about its assessments.Turkish markets initially took ErdoIanand#39s win as a sign of continuity, firming early on Monday, but have since traded less optimistically.

andquotUntil the political landscape reaches some stability, the countryand#39s structural reform agenda is likely to suffer, leaving Turkey exposed to potential shifts in international market sentiment,andquot Moodyand#39s said in a note on Friday.The ratings agency said the credit implications of the election would not be clear until the new prime minister is appointed in late August and until the general election is held next yearZeybekiand#39s criticism of Moodyand#39s was not the only reaction from the government.

Statements last week from YiIit Bulut, ErdoIanand#39s economic aisor, echoed those of an ultra-nationalist camp within the government that often spreads conspiracy theories regarding andquotforeign enemies of Turkey.andquotThe pro-government Sabah daily quoted Bulut as saying over the weekend that certain international institutions andldquoblackmail Turkey on financial issues.

andhellip [But] Turkey is too big to be hurt by such blackmail.andquotErdoIan, who will remain prime minister until he is inaugurated on Aug.

28, wants a staunch loyalist as his replacement, who will be able to hold the ruling Justice and Development Party (AK Party) together and win a stronger parliamentary majority in the election.ErdoIan said last week that he could announce his new prime minister as early as this Thursday.

Turkeyand#39s debt burden growsThe ministerand#39s statements come at a time when Turkey faces a serious threat from growing foreign debt, especially in the private sectorThe nationand#39s foreign debt reached $117 billion in the first quarter of this year — a 58 percent rise over the figure for the whole of 2002. Total debts by the public and private sectors to foreign lenders skyrocketed by 200 percent in the first quarter of 2014 — from $130 billion in 2002 to $390 billion.

The share of foreign debts in the gross domestic product (GDP) increased from 39 percent in 2011 to 47 percent in 2013, official figures reveal. The increase in Turkish debt to global lenders contradicts government propaganda that promotes Turkey paying off its debts to the International Monetary Fund (IMF) as a cure to long-running foreign debt woes.

Public foreign debt was $64.5 billion in 2002 this figure jumped to $115.

8 billion in 2013. The vast majority of foreign debt held by Turkish corporations is in foreign currencies, which increases the burden on businesses given the fact that the Turkish lira has depreciated considerably over the past 12 months.

Turkish private companies owed $43.1 billion in debt to foreign lenders in 2002, and the figure boomed to $266.

3 billion in 2013.The share of debt per capita has also reached worrisome levels.

In 2002, Turkeyand#39s public debt per capita stood at TL 3,896, a number that had more than doubled to TL 8,296 by 2014. The countryand#39s foreign debt per capita was $1,963 in 2002 and is now $5,045, according to earlier calculations by the opposition Republican Peopleand#39s Party (CHP).

Meanwhile, Moodyand#39s also forecast that Turkeyand#39s economy would grow by 3 percent this year — down from 4 percent in 2013 — and raised concern about the independence of its monetary policy. andquotA series of rate cuts to the one-week repo rate between January and July and one cut to the overnight borrowing rate increase inflation risks in Turkey and are likely to fuel questions about the central bankand#39s independence,andquot it said.

ErdoIan, wedded to the idea that high interest rates cause inflation, has repeatedly called for the central bank to make sharper interest rate cuts.

SOURCE: Today’s Zaman