Finance S&P revises Turkey outlook to ‘stable’ on policy shift By Reuters October 1, 2023 Reuters/Cagla Gurdogan The central bank's international net reserves were estimated to have risen $6.6bn to $7bn last week S&P Global Ratings on Friday revised its outlook on Turkey to “stable” from “negative,” citing policy shifts by the country, and affirmed its rating at “B”. Turkey’s new economic team is “enacting measures aimed at cooling the overheated economy and stabilising the exchange rate without undermining financial and fiscal stability”, the ratings agency said in a statement. S&P had in March revised Turkey’s outlook to “negative”, citing vulnerabilities from the country’s low policy rates, directed lending and regulatory control on its foreign currency positions and interest rates. Turkey’s central bank in September raised its key interest rate by 500 basis points to 30 percent, marking a second month of aggressive tightening. The bank, which has hiked rates by 2,150 basis points since June, reiterated it is ready to raise rates further as needed to rein in inflation. Earlier last month, the government said it sees annual inflation rising to 65 percent by year-end, before dipping to 33 percent next year. It also trimmed economic growth forecasts. But recent efforts to shift the country to a more orthodox monetary policy after years of soaring inflation, a sliding lira and boom-and-bust cycles have seen a return of investor confidence. By 2026, absent renewed political uncertainty, the new team can rebalance Turkey’s economy away from external debt financed consumption and toward more balanced external and fiscal accounts, as well as more acceptable levels of inflation, S&P said on Friday. Earlier in September, ratings agency Fitch upgraded Turkey’s foreign currency outlook to “stable” and affirmed its rating at “B”, stating changes in economic policy could reduce financial instability in the near term.