By Tuba Sahin
ANKARA (AA) - A key Japanese credit rating agency on Friday maintained both the long-term foreign and local currency ratings of Turkey at BBB- on the international scale with a stable outlook.
In a report, the Japan Credit Rating Agency (JCR) said: "The ratings are supported by the country’s largest economic base in the Middle East, financial soundness of the banking sector and restrained level of government debt.”
However, JCR said, that the ratings were constrained by macroeconomic imbalances in the country's low saving rate and chronic current account deficit, large external financing needs, dependence on international financial markets, and political and social conditions that need further improvements.
It pointed out that the political conditions and economic activities had been recovering since Turkey’s April 16 constitutional referendum on changes to the country’s constitution which usher in an executive presidency.
According to the report, Turkey's domestic political conditions will maintain its status quo and economy will continue to grow moderately till the general elections scheduled for November 2019 in the country.
"It [JCR] will closely monitor whether the government will accelerate structural reforms to correct the macroeconomic imbalances on the basis of a strengthening power base," the report read.
It stated that Turkish economy was projected to grow at 5 percent in 2017 and at 4 percent for the next two years -- 2018 and 2019 -- mainly due to the fading of stimulus measures.
Foreign capital transactions have turned into a net inflow and the Turkish lira has stabilized since the beginning of 2017 with the backing of Central Bank's monetary policy, JCR said.
Pointing out external debts of the country's banking sector, JCR said: "However, banks are making progress on rolling over its external debt with longer maturity and their net open foreign exchange position is kept restrained at 1.3 percent of their equity capital under the monetary authority's regulations."