International credit rating agencies, yet again, were the target of Prime Minister Recep Tayyip Erdoğan as he accused them of being politically motivated when it came to deciding on Turkey's sovereign rating.
Speaking during a program aired on the private Kanal D TV channel on Sunday night, he said those institutions are now unable to downgrade Turkey because its economy proved so resilient during the global financial crisis and quickly recovered from the turmoil as it now shows signs of strong growth and employment rates, while inflation and interest rates are under control. The prime minister, however, noted that the agencies are hindering further improvement of the Turkish economy as they are turning a blind eye to its remarkable performance at a time when many developed economies in Europe are struggling with serious debt problems.
Also, in an earlier speech during the gala of the International Finance Institute in April, Erdoğan accused the credit rating institutions of being ideologically driven on their country-based evaluations and having special connections with certain groups when making their decisions.
"Unfortunately we have seen examples of such acts by those institutions in today's world. In fact, we have observed that some of them are seriously losing their credibility in the eyes of the people," he warned at the gala.
In his appearance on TV on Sunday night, Erdoğan also reported that during a recent meeting with international credit institutions he had asked if they had been engaging in politics where some of the financially trapped and near-defaulting countries' ratings are still much higher than those of Turkey's, when the latter has posted a tremendous growth rate ranked as one of the top in the world.
"I asked them to make an evaluation based on the actual numbers and the rating started going up as a result. Yet, now they are back to square one again, though they cannot lower [the rating] due to the obvious vibrant economic activity, they put a 'stable' note at most," he said.
Moody's rates Turkish credit Ba2, two notches below investment grade, with a positive outlook. Ba2 is the risk assessor's second-highest non-investment grade. Standard & Poor's rates the country an equivalent BB, also with a positive outlook, and Fitch Ratings ranks Turkey as BB+, just one notch below investment grade.
His accusations were in fact only the latest of such criticism that has started being made in Turkey by the country's leading economists and policymakers.
One of the harshest critics of the rating agencies recently came from the chief economist of the French-Belgian Dexia's Denizbank in Turkey, Saruhan Özel, who raised serious allegations against international credit rating agencies and accused them of being biased and corrupt. Furthermore, he stated that those institutions have caused serious damage to the global financial system by making "unacceptable" mistakes during the 2008-2009 global financial crisis.
Özel accused the credit rating agencies of cooperating with the finance system in the US where the latter was able to clear off their likely-to-default mortgage loans portfolios by transferring them in the form of bonds to other parts of the world thanks to the rating agencies' tendentious ratings.
Özel believes that the international rating institutions' still not having increased Turkey's credit rating to investment grade, even though Turkey is not showing any signs of difficulty in repaying its debts, is contradicting unbiased technical observations and analysis.
"For a lot of corporate investors, countries like Turkey that are repaying all their debts on time without any problems but whose credit ratings are insistently kept below investment grade are valuable. By lending to them, they are making dear profits," Özel said, drawing attention to the fact that Turkey's credit default swap (CDS) rate is much lower than that of other countries that are also given credit ratings below investment grade.
"Either one of these two things are untrue. Turkey should either enter a crisis and its CDS should rapidly rise, or credit rating agencies should back off their insistence and raise Turkey's rating to investment grade. Given the major mistakes those agencies made in the past, the answer to this question is quite obvious," he underlined.
The critics of the international credit rating institutions in Turkey has been increasing each day from various segments of society as the expectations of a rate increase after the elections are now in question given concerns over some macroeconomic indicators such as the current account deficit (CAD) as they find their way to the rating institutions' recent reports.
Turkey's credit rating may come under pressure should it have difficulty financing its CAD, Moody's Investors Service said on Monday, urging the government to tighten the budget after this week's parliamentary elections. Erdoğan's Justice and Development Party (AK Party) is most likely to secure enough seats to remain in office in the June 12 elections.
On Sunday, Erdoğan commented also on the CAD problem in Turkey and said he has no such concerns. He added that Turkey could easily overcome this issue as long as its economy rests on solid ground. "Turkey is a safe harbor for many international investors as they keep investing in the stock exchange or in the production side of the economy. Those countries that are being referred to as good investment destinations by some of the international institutions do not even have as healthy institutions as Turkey does," the prime minister noted.
Cihan news agency
"Today, Turkey has been born from the ashes, the building and fixing process for a new Turkey has gained strength," newly elected Turkish president Recep Tayyip Erdogan wrote.
Turkey's Recep Tayyip Erdogan took the presidential oath on Thursday after stepping down as Prime Minister on Wednesday.
Today's newspapers cover Turkey's ruling AK party's congress to elect a new party chairman, and Erdogan's handing over the AK Party leadership to Davutoglu.
The U.S. administration designated Charge D'affaires to Ankara to participate the inauguration ceremony of president-elect Erdogan.
Erdogan said he would ask incoming prime minister Ahmet Davutoglu to form a new government on Thursday and a new cabinet of ministers would be announced the following day.
An Egyptian-brokered ceasefire came into effect on Tuesday, bringing 51 days of relentless Israeli attacks to a halt in the blockaded coastal enclave.
Today’s newspapers cover Turkey’s ruling AK party’s congress to elect a new party chairman, and thousands of Turks forming what is hoped to be the world’s largest portrait of Mustafa Kemal Ataturk, founder of the Republic of Turkey.
It is not yet clear who he will be meeting during his stay, but there are believed to be no plans for him to meet Turkish Foreign Minister-turned-Prime Minister Ahmet Davutoglu.
The nation recorded 162,445 medical tourists by the end of the first half of 2014.
At least 100 people are arriving from Iraq each day, many of them smuggled across the border by locals, sometimes paying up to $1,000 per family.
The Chinese Foreign Ministry said it is coordinating with Turkish authorities to find the workers, kidnapped by militants on Monday.
Many Yazidis fleeing from the war in Iraq are also waiting for shelter on the border with Turkey, according to some reports.
The advance of ISIL has alarmed Ankara and its Western allies, forcing them to step up intelligence sharing and tighten security cooperation.
Turkish dailies on Tuesday report on outgoing President Gul's farewell to the public and to his counterparts, and the dam river tragedy in Turkey's southeastern province of Siirt.
The firms were asked to extend their bids until the end of the year, the Defence Undersecretariat said in a statement.
Turkish Union of Bars head Metin Feyzioglu said he will attend a new legal year ceremony and speak, after President-elect Recep Tayyip Erdogan said he would not attend in case of a Feyzioglu address.