By Anadolu Agency
September 19, 2023 7:08 amNEW YORK
Stressing that Türkiye has overcome problems in accessing external financing following the steps taken for the economy, the Turkish treasury and finance minister said the country has obtained $10.4 billion in external financing since June, including $6.7 billion from the banking sector, $367 million from the non-bank financial sector and $3.26 billion from the real sector.
“This is the clearest indication of confidence in the country’s economy,” Mehmet Simsek told Anadolu in New York on Monday.
The decisions taken by the new economic administration led by Simsek are bearing fruit.
Back-to-back positive statements from international rating agencies Moody’s and Fitch as well as a decline in the country’s five-year credit risk premium (CDS) suggest that an environment of confidence has emerged in international markets.
Recently, international credit rating agency Fitch Ratings affirmed Türkiye’s credit rating at “B” and revised the rating outlook from “negative” to “stable” after two years.
Fitch reported that the revision of the outlook to “stable” reflects a return to a more traditional and consistent policy mix aimed at mitigating short-term macro-financial stability risks and alleviating balance of payments pressures.
The CDS score, which before the election was 700 points, fell below 400 basis points following the measures taken in the economy and the messages given in the Medium Term Program.
Moody’s also upgraded its growth forecast for the Turkish economy from 2.6% to 4.2% this year and from 2% to 3% next year, confirming that the right policy sets are in place.
All these post-election developments have paved the way for banks and large companies in Türkiye to seek external funding.
The minister said confidence in the country is gradually increasing thanks to the rational program carried out in economic policies.
Referring to the financing provided by banks over the past month, he said: “With the strengthening of confidence in the government, the problems encountered with foreign financing are also being solved.”
VakifBank, Yapive Kredi, Eximbank, Industrial Development Bank of Türkiye, Denizbank, and Is Bankasi attracted a high level of interest in their issuances in August and September, he said, adding that a total of $2.05 billion of financing was provided in the last month, with the issuances made by these banks.
The issuances of these banks attracted interest from a very wide geography such as the UK, the Middle East, Europe, America, and Asia-Pacific countries; almost all leading economies focused on Türkiye for investments, the minister said.
Pointing out that the country received positive results from the contacts it held in the Gulf region after the economic confidence environment created and the bilateral talks initiated under the leadership of President Recep Tayyip Erdogan, Simsek said, “Turk Eximbank, under the coordination of ITFC, the trade finance institution of the Islamic Development Bank, with the participation of eight financial institutions from the Gulf region, secured $277 million of one-year term foreign resources to support Turkish exports.”
Stating that investor interest in the real sector has also increased, he said Arcelik provided $400 million of financing.
The minister pointed out that Ronesans Holding also secured a loan of €781 million ($834 million) under the guarantee of the UK Export Finance in July.
He emphasized the importance of price stability and said, “Price stability is a must for lasting prosperity, high growth, high employment, and additional foreign resources.
“We set realistic targets to ensure price stability. We will redirect resources from consumption to exports and investment.”
He said access to finance should be eased for competitiveness, “If we can permanently reduce inflation to single digits, our companies will have access to 5-10 years maturity resources from the world at reasonable costs.”
“Then there will not be many countries in the world that can compete with Türkiye.”
Stating that the Medium Term Program also gives confidence to international markets, he said the program has three main components: fighting inflation, fiscal discipline, and structural reforms, and that the fourth element of the program is foreign resources.
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