Moody's Says Turkey Election Spending Restraint Will Be `Credit-Positive'

Moody’s Investors Service said limits by the government on spending ahead of next year’s general election would have a positive impact on the country’s credit.

“If the government spending is quite restrained during the pre-election period this will be something that we would consider to be credit-positive, which doesn’t mean an upgrade,” Moody’s analyst Sarah Carlson said in an interview in Istanbul today. She declined comment on the timing and size of any upgrade.

An estimate by the central bank that it may start increasing the benchmark interest rate in the fourth quarter of next year is “reasonable” and “much what I would expect,” Carlson said.

Moody’s rates Turkey Ba2 and raised its outlook to “positive” from “stable” on Oct. 5 saying debt management had improved and the economy had revived to pre-crisis levels. Turkish parliamentary elections are due by July next year.

To contact the reporter on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net

To contact the editor responsible for this story: Mark Bentley at mbentley3@bloomberg.net