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Türkiye retains notable credit strengths, particularly its low public debt and robust access to external financing, even during periods of economic stress, according to U.S.-based Fitch Ratings Senior Director Erich Arispe Morales.
Speaking at a recent online panel hosted by the rating agency on Wednesday, Morales also indicated that the Central Bank of the Republic of Türkiye (CBRT) is not expected to raise interest rates further in the current cycle. Morales added that Fitch forecasts the year-end policy rate to stand at 33%, with a further decline to 24% projected for next year.
He emphasized that the central bank maintains sufficient policy space, which can be utilized for tightening if necessary.
Morales reiterated Türkiye’s longstanding credit advantages, citing “low public debt, continuous access to external financing even in times of elevated uncertainty or fiscal stress, and a resilient, well-managed banking sector.” He also noted that Türkiye’s per capita gross domestic product (GDP) remains high relative to peer economies.
Pointing to recent economic indicators, Morales acknowledged the decline in FX-protected deposit accounts (known as KKM), saying it has helped mitigate foreign exchange-related risks. “Another positive development is the ongoing progress in reducing financial sector dollarization,” he said. “Although dollarization has risen slightly in recent months, the overall trend still reflects a structural improvement.”
He also highlighted positive momentum in Türkiye’s current account balance. “We believe the current account deficit has narrowed significantly compared to previous periods. The latest data suggests it is approaching $13 billion on an annual basis,” Morales said.
Morales stated that further enhancements in foreign reserves, easing exchange rate pressure, and achieving lower inflation would be key factors considered in a potential upgrade of Türkiye’s credit rating.
Fitch Ratings Banks Director Ahmet Kilinc also pointed out that credit growth in Turkish banks remains strong, contributing to the resilience of the broader financial system.
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