FITCH's Review of Turkey During Covid-19

Posted On: 30 April, 2020 In Blog

Many countries around the world have introduced measures to try and ease the impact of Covid-19 on the economy, and Turkey is no different, with the Central Bank increasing it’s bond buying programme, postponing debt payments, increasing the limit of the credit guarantee fund and the government reducing the tax burden for various industries and sectors.

Economies have taken a huge hit in recent weeks as people from all walks of life have been placed under curfew with the country going into a lockdown in order to try and contain & curb the spread, and though there are signs of a recovery, the central bank has recently cut it’s policy rate by 100 basis points to 8.75% aimed to boost growth.

To date the package of measures introduced are around TL 100 billion, which is approx. 2% of the countries GDP, and according to Douglas Winslow, who is the Director of European sovereign ratings at FITCH there is room for a further fiscal stimulus package if needed, from Turkey.

Winslow mentioned that ‘Turkey’s general government debt started the period significantly below similarly-rated countries (BB Credit rating) at around 33% of GDP’, and he went on to add ‘we expect a rise of above 38% this year, still below the projected 51% figure for peer group countries’.

In basic terms, it’s good to know that if necessary more measures could be introduced in order to shore up finances, try to boost the economy where necessary and help those that need it.

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