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Fitch downgrades Turkey’s rating, cites sacking of central bank governor

Fitch said the dismissal also added to uncertainties over the prospects for structural reforms and management of the public sector finances.

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Ratings agency Fitch downgraded Turkey’s sovereign rating to “BB-“ on Friday, saying the dismissal of its central bank governor heightens doubts over the authorities’ tolerance for a period of sustained below-trend growth, Reuters reported.

Governor Murat Çetinkaya was sacked on July 6 and President Recep Tayyip Erdoğan said on Wednesday he had dismissed him because Çetinkaya failed to follow instructions on interest rates and the bank had not properly fulfilled its role.

Fitch, which lowered Turkey’s rating from “BB” with a negative outlook, said Çetinkaya’s removal also highlights a deterioration in institutional independence and economic policy coherence and credibility.

It said the move “risks damaging already weak domestic confidence (evidenced by rising dollarisation), jeopardising the inflow of foreign capital needed to meet Turkey’s large external financing requirement and worsening economic outcomes.”

Fitch said the dismissal also added to uncertainties over the prospects for structural reforms and management of the public sector finances.

Source: Turkish Minute

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