Turkey is among five countries where the economic fallout from the coronavirus pandemic will lead to higher funding needs and debt, Moody’s Public Sector Europe said in a report published on Tuesday.
Pandemic sparked economic contraction will translate into falling shared taxes and own-source revenues for regional and local governments (RLGs) in Turkey, as well as the Czech Republic, Poland, Hungary and Russia, the report said.
Turkey’s economy was only just recovering from a 2018 recession when the COVID-19 coronavirus hit this year, sending a shock through the economy.
Experts say its economy is expected to contract this year for the first time in more than a decade as the pandemic and related restrictions hit demand.
Moreover, the lira is one of this year’s worst performing currencies in emerging markets with a loss of more than 14 percent. The currency dropped towards a record low against the euro on Monday, amid state interventions that have tied it to the dollar and concerns of EU sanctions against Ankara over drilling plans in the East Mediterranean.
“Regional and local governments in the Czech Republic, Poland, Hungary, Russia and Turkey will be hit hard by the coronavirus shock in 2020,” the report quoted Vladlen Kuznetsov, a Moody’s vice president and senior analyst, as saying.
RLGs in Turkey and Poland are the most vulnerable to a prolonged pandemic crisis due to both high debt exposure and modest operating performance, respectively, it said.
Turkey, along with Poland and Hungary, will record the highest debt burden hike in 2020, the report added.