Fitch upgrades Turkey’s sovereign rating to B+ on tighter monetary policies, Simsek claims credit

Fitch upgraded Turkey’s rating to “B+” from “B” on Friday, saying tighter approaches to monetary policy were helping combat inflationary trends. Economy czar Mehmet Simsek claimed credit for the upgrade, promising more to come in the second half of the year.


The change comes after Turkey’s central bank left its key interest rate steady in February.

“Upgrade reflects increased confidence in the durability and effectiveness of policies implemented since the pivot in June 2023,” Fitch said. It also upgraded the country’s outlook to positive from stable.

After President Tayyip Erdogan’s re-election in May, Turkey abandoned its unorthodox low interest rate policy in favour of tightening. It has raised its key rate to 45% from 8.5% since June.

Inflation subsequently rose to an annual 67.07% in February, exceeding expectations and keeping up the pressure for tight monetary policy. Economists expect it to decline to around 40% by the end of the year.


“The central bank has tightened monetary conditions through a combination of larger-than-expected interest rate hikes to 45 per cent, absorption of excess liquidity through reserve requirements and deposit auctions, and targeted credit policies,” the rating agency said.


As a result, inflation expectations have eased, and “overall credit growth has slowed, but it remains high for household loans,” it added.


Fitch expects inflation to average 58 per cent in 2024 and finish the year at 40 per cent, above the central bank’s intermediate target of 36 per cent. Inflation is forecast to fall further to 29 per cent in 2025 amid continued tightening of the monetary policy.



Turkish Finance Minister Mehmet Simsek said the rating upgrade was a concrete result of the government’s economy programme as well as its rule-based and predictable policies.


“Macrofinancial stability will be further strengthened and our credit rating will increase in H2 with disinflation, narrowing current account deficit and budget discipline,” Simsek added on social media platform X.


Turkey is expected to take more policy steps to cool inflation after local elections on March 31, setting the stage for more pain for Turks already struggling after years of soaring prices, according to data and some economists.



Claiming that disinflation, narrowing current account deficit and budget discipline will be achieved in the second half of the year, Şimşek said that the credit rating will increase further.


Minister Şimşek’s post on X is as follows:


“The concrete results of the program we implemented were also reflected in our country’s credit score. Fitch, the international credit rating agency, did not remain indifferent to this success and increased our credit rating by one notch, while changing our outlook to positive. The positive outlook indicates that the rating increase will continue in the coming period. Turkey’s rule-based and predictable policies that comply with international norms were effective in this increase in score, which came after 12 years. Such positive developments will increasingly continue as macro-financial stability becomes stronger.


“In the second half of the year, thanks to disinflation, narrowing current account deficit and budget discipline, macro-financial stability will be further strengthened and our credit rating will increase.”


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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and and has contributed to the financial daily Referans and the liberal daily Radikal.