Mehmet Şimşek: We are the only country whose rating has been upgraded by two notches.

The Minister of Treasury and Finance, Mehmet Şimşek, evaluated S&P's move regarding Turkey's credit rating on his social media account. Şimşek stated that Turkey is the only country whose rating was raised by two notches by the international credit rating agency Standard & Poor's.

Şimşek continued his statements as follows: S&P raised our credit rating from B+ to BB-. This year, we are the only country whose rating has been increased by two notches by three major credit rating agencies.

The increase in the rating was influenced by the stabilization of the economy, decreasing current account deficit and external financing needs, the stability of the Turkish lira, strengthening reserves, and the disinflation process.

The positive developments we achieved with our program have also reduced our country risk premium and significantly improved our external borrowing costs.

Market indicators implying a higher rating indicate that positive developments will continue in the upcoming period."

S&P RAISED TURKEY'S CREDIT RATING

In a statement made by S&P last night, evaluations regarding the Turkish economy were thoroughly addressed, and a rating announcement was made. It was reported that Turkey's long-term credit rating was raised from "B+" to "BB-", and the outlook for the credit rating is "stable." It was also noted that the country's short-term credit rating, which is "B," was confirmed.

PRAISED THE TIGHT MONETARY POLICY

In the statement of the international credit rating agency, it was stated that the tight monetary policy stance of the Central Bank of the Republic of Turkey (CBRT) has enabled Turkish officials to stabilize the lira, reduce inflation, rebuild reserves, and cleanse the financial system from dollarization. The statement noted that the gap in savings between Turkey and the rest of the world has narrowed, and this situation is reflected in the approximately 4-point decrease in the current account deficit to Gross Domestic Product (GDP) ratio recorded since 2022. The outlook was stated to be stable, reflecting the balanced risks in the next 12 months regarding the officials' ambitious plans to reduce the still high inflation, manage workers' wage expectations, and rebalance the Turkish economy. S&P's statement indicated that the rating could be raised if further progress is made in reducing inflation to single-digit levels and restoring long-term confidence in the Turkish lira and, more broadly, local capital markets.

"RISK" WARNING FOR MINIMUM WAGE

S&P's statement indicated that indexing the wage increase rate to the government's inflation target of 17% by the end of 2025, instead of the approximately 44% inflation rate for 2024, poses a risk for the anti-inflation program. It was stated that it is assumed that the wage agreement will be determined between these two extremes, but any increase rate above 30% would prolong the anti-inflation process. The statement noted that due to the absence of any planned elections in the country until 2028, there could be room to suppress demand and inflation through gradual tightening of fiscal and income policies. It was indicated that the slowdown in private consumption would play a central role in cooling the Turkish economy, and it was reported that real GDP growth is expected to be 2.3% in 2025.

THE RATING OUTLOOK WAS POSITIVE IN MAY

Finally, in May, S&P raised Turkey's credit rating from "B" to "B+" while maintaining a "positive" outlook for the credit rating.