Fitch: Local government budgets in Turkey are resistant to inflation and earthquakes

The Fitch credit rating agency stated that the budget of local governments in Turkey is resistant to inflation and earthquakes.

In a statement by Fitch, Turkey’s national and local government (LRG) budget results are reported to be resilient to high inflation in 2022 and can absorb the financial impact of the earthquakes in February.

In the statement, it is stated that the 2022 budget prospects of the 9 metropolitan municipalities (Ankara, Istanbul, Izmir, Adana, Bursa, Konya, Manisa, Mersin, Muğla) assessed by the credit rating agency are better than expected.

EXPECTED CONTRIBUTION TO MUNICIPALITIES IN THE RANGE OF 5 TO 10 PERCENT

In the statement, it was indicated that the budget balance of 9 metropolitan municipalities was registered at 42 percent despite the expectation of 39 percent last year, and it was recorded that the average balance of debt operations was 1.4 times , despite the expectation of 1.6 times .

The statement said:

“As required by law, the central government will cover most of the additional expenses due to earthquakes.

We hope that the impact on the budgets of the metropolitan municipalities will be limited to the supply of vehicles and equipment to support the affected areas. To reflect this, we anticipate an increase of 5 percent (budget contribution) for medium-sized metropolitan municipalities and 10 percent for larger ones.” (AA)