US ratings agency Standard & Poor’s (S&P) put its foreign currency debt ratings for Turkey on CreditWatch with negative implications on 18 July. The agency said the move reflected continuing adverse fiscal trends and rising debt service pressures, which could lead to a downgrade if they remained unchecked. S&P’s current rating is B+ for long-term and B for short-term foreign currency debt.

S&P added that CreditWatch status should be clarified over the next few months, as the new government establishes its economic policies. A senior S&P official subsequently said that the new government needed to implement structural reforms rapidly, such as streamlining the social security system, and privatisation.

S&P has also placed on CreditWatch with negative implications the B+ long-term foreign currency debt ratings of state Ziraat Bankasi (Agricultural Bank), the private sector Garanti Bankasi, and Ankara municipality.

Another US credit ratings agency, Duff & Phelps, reaffirmed its BB+ rating on 19 July.

Despite retaining its rating unchanged, the agency stressed the need for structural reforms and prescribed an acceleration in privatisation, an increase in tax revenues, a reduction in agricultural subsidies, and the creation of more employment opportunities.