LONDON, May 22 (Reuters) - Turkey’s government finances could deteriorate rapidly if authorities fail to stem the current pressure on the currency and government borrowing costs, credit rating agency S&P Global said on Tuesday.
S&P already rates Turkey lower than rivals Moody’s and Fitch at BB- following a downgrade this month but one of its most senior sovereign analysts, Frank Gill, told Reuters it could potentially act again if the current market rout continued.
Asked whether S&P would reconsider the ‘stable’ outlook it put on Turkey’s rating as part of the downgrade if there was no let-up in the current market pressure, Gill said “potentially”.
“The concern is that the balance of payments situation worsens and that really starts to hit growth and the fiscals pretty quickly, and the banks.”
He added that higher oil prices weren’t being passed on at petrol pumps, meaning that the government’s tax income was falling, while banks have given a lot of loans in dollars which are becoming more expensive to repay as the lira tumbles.
“A lot will ultimately depend on what the central bank does, if anything,” Gill said.
At the same time he said Ankara does have some “substantial buffers and we think there is absolutely a way out of this,” calling authorities to take firm action. (Reporting by Marc Jones Editing by Hugh Lawson)