Page 14 - bne_newspaper_March_9_2018

Southeast Europe
March 9, 2018 www.intellinews.com I Page 14
priority accorded to short-term growth regardless, it appears, of the medium-term consequences.” Lindow also referred to the continuing erosion
of Turkey's executive institutions with the government's ongoing activities to remove suspected sympathisers with the Gulen movement blamed for 2016's coup attempt and the ongoing state of emergency. “The undermining of the authority of the judiciary is illustrated by the government's refusal to honor a Constitutional Court ruling to release certain political prisoners, and a lower court later sentenced the prisoners
to life terms in prison. Deep divisions in Turkish society were evident in the campaign before the referendum on the constitutional amendments
last April and the vote itself. Those amendments— which will eliminate the office of the prime minister and very significantly expand the authority of the president when they become effective next year, with limited checks and balances—are likely to undermine the predictability and therefore the effectiveness of policymaking.”
Set against the negative institutional backdrop, Turkey's external position, debt and rollover needs have continued to worsen, Moody’s observed. Although the government's own external borrowing needs are relatively low, the country as a whole has
very large external financing needs given sizeable current account deficits, maturing long-term debt and high levels of short-term debt. “This external exposure has continued to grow over the past year and is expected to continue to do so,” said Lindow. “The country's foreign exchange buffers are
very low compared to these needs; the country's External Vulnerability Indicator is expected to
rise to well over 200%, which is extremely high in comparison to Turkey's rating peers, and signals an ever-rising exposure to changes in international investor sentiment.”
The potential triggers of a re-evaluation of Turkish country risk by foreign investors continue to multiply, Moody’s concluded, with the continuing deterioration of Turkey's geopolitical situation,
its already strained domestic politics and the prospects of monetary policy tightening in the more developed economies. “Amplifying its vulnerability to external shock are Turkey's political risks, with the convergence of risks from the geopolitical arena and domestic politics.
On the domestic front, as described above, the government's legal crackdown since the failed coup in July 2016 has taken a negative toll on the investment climate and relations between Turkey and the US and EU,” Lindow added.
COUNTRY REPORTS
Check out IntelliNews Pro’s Country Reports covering the 30 countries in Central & Eastern Europe/Commonwealth of Independent States.
A monthly round up of the most important economic, finance, business and political events, the reports are aimed at busy professional investors and companies that need to keep on top of the story.
To subscribe to the reports delivered by email get in touch with our sales staff for a trial.
T. +44 203 633 2008 E. sales@intellinews.com
Or go to bne.eu/welcome to see samples of this and other products.