Moody's decision to downgrade Turkey's credit rating raised questions about the international agency's ‘objectivity and neutrality,’ the Finance Ministry in Ankara said on Saturday.
Moody's on Friday downgraded Turkey's credit score from Ba3 to B1 and maintained a negative outlook, citing a rising risk of a balance of payments crisis and a government default.
The downgrade comes ahead of the controversial rerun on June 23 of the mayoral election in Istanbul, Turkey's financial capital, which Moody's said ‘creates potential for political unrest’ that could trigger a decline in the value of the lira and depletion of foreign currency reserves.
The agency said ‘the continued erosion in institutional strength and policy effectiveness on investor confidence’ was outweighing Turkey's strengths such as its large, diverse economy and low level of government debt.
The ministry attacked Moody's, saying its decision was ‘not compatible with the basic indicators of the Turkish economy and therefore raises question marks on the objectivity and neutrality of its analyses.’ The economy fell into a recession at the end of last year.
Year-on-year inflation was 18.7 per cent in May, according to government data. Inflation is now at its highest level since September 2003, the year Recep Tayyip Erdogan first took power as prime minister.
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