This will serve as a new anchor of confidence for the Turkish economy and will, in return, trigger credit rating upgrades in favor of Turkey, they noted. Another common opinion is that the fiscal rule for budgetary performance will foster Turkey’s chances of decoupling from the developing markets by keeping it well clear of fears of contagion of the public debts.The fiscal rule aims primarily to cement Turkey’s fiscal discipline and predictability in the long run by fixing a budget deficit target of 1 percent over gross domestic product (GDP) and a GDP growth rate of 5 percent per year in the short and middle term.
International investment consultancy company Nomura released a statement noting that the fiscal rule, once it is enacted by Parliament, will draw clear lines between politics and the economy. This will make it possible to devise long-term economic plans and projections, it underlined. Nomura further acknowledged that the deficit and growth figures numbers attained by the implementation of the fiscal rule will always be in accordance with the relevant EU standards. Asserting that the fiscal rule is expected to go into effect at the end of June of this year, Nomura commented that this will raise Turkey’s profile in the eyes of investors, who will exempt Turkey from the list of countries they avoid investing in due to concerns of their excessive debts. Turkey will soon become an investable market with an impeccable credit rating under the fiscal rule, it added. Nomura highlighted that Turkey may soon see credit rating upgrades and that the central bank’s monetary policy burdens may be alleviated by the provisions of the fiscal rule.
The latest International Monetary Fund (IMF) Global Markets Monitor also drew attention to estimates that the credit rating agencies will raise Turkey’s rating thanks to the extra confidence gained with the fiscal rule.
Swiss-based bank Credit Suisse termed the fiscal rule a significant step in making Turkey a more predictable country. Underlining that Turkey’s fiscal picture is improving, it said fiscal discipline has been on the rise recently and estimated that Turkey’s budget revenues will be better than expected. EFG International, a foreign consultancy company, also had praise for the fiscal rule. It described the rule as leading to an augmentation in the country’s credibility. However, the government’s commitment to the rule will still have a determining effect, it stated.
Treasury Undersecretary İbrahim Çanakçı said that with the fiscal rule, Turkey’s debt stock will dwindle to 30 percent within the next five to 10 years, and is expected to further drop to 15 percent in the long run.
