Osman Şenkul
Turkey’s Minister of Treasury and Finance, Mehmet Şimşek, has undertaken a comprehensive series of international ‘road shows’ and high-level financial visits since his appointment in June 2023, intending to present the Medium-Term Economic Programme (MTEP) and, in this context, attract direct investment.
Fundamentally, the primary objective underlying these visits – organised and carried out “to secure international financing” – was also to establish and develop close relations with global fund managers, multilateral development banks and leading credit rating agencies, with a view to bolstering market confidence.
As we know, Şimşek began these “trips” with his visit to London in October 2023, followed by “closed-door round-table meetings” in January and May 2025. The discussions during these trips were of great significance, as they were conducted in coordination with global asset managers – coordinated by Citigroup and Bank of America – who collectively manage a total of 75 trillion dollars.
Şimşek attended the 79th UN General Assembly in September 2024 alongside President Erdoğan and, through Citibank, organised three major investor meetings in New York targeting sovereign wealth funds with leading US portfolio managers.
In January 2026, Minister Şimşek, alongside Central Bank Governor Fatih Karahan, concluded a marathon investor conference in London, bringing together more than 500 institutional investors representing a total fund size exceeding 58 trillion dollars.
During this tour, he also conducted vital technical assessments with leading credit rating agencies such as Standard & Poor’s, Moody’s and Fitch Ratings.
During the IMF and World Bank Spring Meetings held in Washington, Minister Şimşek signed a critical $2 billion financing agreement with the World Bank for the Istanbul Northern Railway Corridor Project (INRAIL), which is integrated into a broader $6.75 billion international transport development framework. He also chaired the 18th Turkey Investment Conference, hosted by Citi in New York.
Following these significant visits, Minister Şimşek also launched the ‘Climate Action Bridge’ at the London Climate Action Week in June 2026, aimed at utilising global green capital pools to finance Turkey’s climate resilience.
Şimşek also attended the IMF–World Bank Annual Meetings held in October 2025 and April 2025, as well as the G20 finance meetings. According to statements made, in April 2025, Şimşek met with US Treasury Secretary Scott Bessent and provided US officials with detailed information on Turkey’s efforts towards financial stability.
During his meetings in the Gulf region with Saudi Arabia, Qatar and the UAE, he carried out targeted strategic initiatives regarding direct capital injections, asset management links and cooperation with sovereign wealth funds; he also participated in the Future Investment Initiative (Future Investment Initiative – FII), held in Riyadh, Saudi Arabia, where he held detailed discussions with the region’s financial institutions and government officials. As part of this, Şimşek undertook numerous regional tours covering Riyadh, Doha and Abu Dhabi, with the aim of negotiating public-private sector financing channels and optimising sovereign wealth fund deposits.
Towards the end of 2023, whilst conducting a targeted series of investment meetings with French and German business circles at the Franco-German Forum, Mehmet Şimşek also collaborated directly with senior staff from the Organisation for Economic Co-operation and Development (OECD) Finance Directorate.
Şimşek added East Asia to this intensive travel programme aimed at securing funding in early 2026; as part of this, he also visited private equity and financial centres in Hong Kong. He had stated that these visits aimed to channel various Asian funding sources towards developing infrastructure projects in Turkey.
However, as no information regarding the costs was shared, it proved difficult to obtain concrete evidence that these trips—covering tens of thousands of kilometres—had contributed to Turkey’s credit rating, let alone secured ‘favourable terms and low-cost’ loans.
According to the basic definition on this subject, “Country credit ratings indicate a government’s level of risk and determine how much interest it must pay when borrowing from international markets.” With this in mind, if we were to review the country credit ratings in question;
- AAA/Prime is recognised as the highest rating. Countries holding this rating are defined as having “the highest financial stability and the lowest borrowing costs”. These countries hold the highest AAA or Aaa rating from leading rating agencies (Fitch, Moody’s, S&P). Australia, Canada, Denmark, Germany, Luxembourg, the Netherlands, Norway, Singapore and Switzerland, which hold the highest ratings across all categories, borrow at the lowest interest rates globally.
- Many large or developed economies, including major economies and those in the mid-tier rating category, are just below the absolute top tier or within the ‘safe investment grade’, with ratings of BBB-/Baa3 or higher.
- The US, recognised as the world’s largest economy, holds AA+ (S&P/Fitch) and Aa1 (Moody’s) ratings; the United Kingdom holds AA/Aa3 ratings. China and Japan are rated in the A category (A+/A1).
- Countries facing serious economic or debt crises are rated in the CCC or C categories. Countries such as Ethiopia, Lebanon or Sri Lanka, which are designated as SD (Selective Default) or RD/D (Restricted/Full Default), face the suspension or severe restriction of their access to standard global bond markets.
- According to the Ministry of Treasury and Finance, Turkey is rated around BB- (S&P/Fitch) and Ba3 (Moody’s), placing it in the speculative/non-investment grade category, with a stable outlook. Speculative and Default Ratings: Ratings of BB+ / Ba1 or lower are considered speculative or ‘junk’ ratings, which in turn increase borrowing costs.
In short, major international rating agencies assess Turkey as being below investment grade (speculative or ‘junk’ status); however, it has achieved a ‘stable outlook’, particularly due to the impact of the ‘high interest rate policies’ implemented in recent times:
- Fitch Ratings: BB- (Stable outlook)
- S&P Global Ratings: BB- (Stable outlook)
- Moody’s Ratings: Ba3 (Stable outlook)
Of course, it is also clear that a stable outlook alone is not sufficient to reduce borrowing costs. In other words, excessively high domestic borrowing costs drive up investment costs and, consequently, production costs; as a result, the inflation that is intended to be reduced continues to rise.
To put it another way: the high interest rate policy, which has been in place for some time and is still being maintained at levels well above even the official inflation rate, does serve to a certain extent as a demand-restricting measure in the fight against inflation; however, the real sector, which is focused on production, continues to bear the brunt of this cost; this situation, by increasing costs, means that whilst demand-pull inflation may be curbed, cost-push inflation is gathering further momentum and, of course, continues to have a more severe impact on workers.
The increasing difficulty in accessing finance, the decline in investment appetite, rising production costs and pressures on employment not only significantly hamper companies’ operations, but the financial sector is also managing to stay afloat by taking measures—which further increase investment costs—to cope with growing repayment difficulties. In other words, banks are forced to both raise interest rates and tighten lending conditions when granting loans. As a result of such developments, SMEs in particular are struggling to meet their working capital requirements, whilst many firms are forced to scale back production or postpone investments; consequently, redundancies are on the rise and unemployment is increasing.
All these developments not only fail to curb inflation—which is shaking the economy to its foundations—but actually fuel it further; they are also increasingly fuelling social unrest. Consequently, alongside the downgrading of countries’ credit ratings, violations of workers’ rights are rising significantly, and, of course, poverty is spreading to ever-wider sections of the population. In this regard, the ‘Global Rights Index’, prepared by the International Trade Union Confederation (ITUC) – an organisation that closely monitors global developments, assesses the situation and proposes solutions – also details the overall picture in great detail.
The Global Rights Index, now in its 13th edition this year and prepared by the ITUC – which represents 191 million workers across 169 countries and 340 national member organisations – also highlights this situation in Turkey. Serving as a snapshot of labour rights violations, the 2026 Global Rights Index reveals a pattern that those in power would prefer to keep hidden: “The systematic undermining of democracy through attacks on workers, trade unions and collective bargaining. These events – ranging from the suppression of strikes to the erosion of legal protections and the criminalisation of trade unions – are not isolated incidents; they form part of a broader strategy aimed at silencing dissent and reinforcing inequality.”
According to the ITUC Global Rights Index, the 10 worst countries for workers in 2026, listed alphabetically, are: “Argentina, Belarus, Ecuador, Egypt, Eswatini, Myanmar, Nigeria, Panama, Tunisia and Turkey.”
In addition, the ratings of four countries deteriorated: Albania, Argentina, France and Panama. The rankings of three countries improved: Botswana, the United Kingdom and Uruguay.
Following a measurable increase in violations, seven countries were placed on the “Watch List”: Guinea-Bissau, Israel, Liberia, the Philippines, the Republic of Moldova, the United States and Zimbabwe.
As can be seen from this, the Turkish economy – which has been managed through high-interest-rate policies for nearly a decade – has not only failed to escape high inflation, even according to official figures, but is also moving to the forefront of the global agenda due to severe impoverishment and a rising tide of rights violations.
Luc Triangle, General Secretary of the International Trade Union Confederation, states: “This year’s Index highlights the growing challenges faced by the global labour movement as it seeks to protect the rights and interests of ordinary workers against the reactionary policies of governments and companies,” and explains:
“Among the most shocking figures for 2026 are a three per cent rise in attacks on civil liberties – including a five per cent increase in violations of freedom of expression and assembly over the past year, a six per cent rise in violent attacks against workers, and a striking increase in the number of workers and their representatives being arrested and detained. This sharp rise in these indicators suggests that the persecution of trade union leaders has become commonplace in an increasing number of countries. We are seeing new technologies being used increasingly as a means of control to monitor, discipline and silence workers. We are also observing a decline in the number of governments that consult trade unions in good faith before amending or enacting labour laws.”
Turkey, which for many years has been rated below investment grade by credit rating agencies as ‘speculative’ or ‘junk status’, remains amongst the 10 worst countries for workers due to ‘unrelentingly high inflation, compounded by interest rates that are even higher than the inflation rate itself’.
As Erdal Bahçıvan, President of the Istanbul Chamber of Industry (ISO), has also highlighted in recent ISO Assembly meetings, the high-interest-rate environment and financing costs are placing heavy pressure on industry; indeed, should the financing chain break, the production chain will inevitably come to a standstill.
Under today’s high-interest-rate conditions, industrialists are forced to borrow at loan interest rates far exceeding the rate of inflation in order to sustain production; this situation, in turn, weakens their competitive strength. When credit mechanisms fail to function adequately, the burden of financing shifts to SMEs and the lower tiers of the supply chain; SMEs, in turn, are forced to finance their customers, leading to working capital shortages.
Consequently, at a time of increasing uncertainty and cost pressures, it is clear that safeguarding production capacity and technological transformation is of critical importance at the level of national security.
However, at a time when high interest rates in Turkey are slowing down new investment by increasing borrowing costs, reducing production volumes and, consequently, adversely affecting economic growth, new investments in workshops, factories, machinery or technology are also inevitably being shelved due to rising costs.
Partly as a result of this distorted development, investors are channelling their funds into financial markets to benefit from high interest rates rather than directing them towards production and trade; consequently, investment in the real sector is being sidelined. This is because the movement of capital—which, under the new conditions, prefers to hold cash assets in interest-bearing accounts rather than taking risks and creating employment—significantly weakens the economy’s potential. Furthermore, as consumer loans become increasingly unaffordable due to high interest rates, domestic demand inevitably falls; this, in turn, reduces factories’ capacity utilisation rates, thereby slowing down existing production. At the same time, the restriction on production hinders the creation of new job opportunities, and poverty is exacerbated by rising unemployment pressures. More importantly, the inflow of foreign currency (hot money) attracted by high interest rates leads to the excessive appreciation of the national currency, undermining the competitiveness of exporting manufacturers in foreign markets; consequently, it appears that the Minister of Treasury and Finance, Mehmet Şimşek, will have to embark on new rounds of borrowing to secure the resources the country requires. Having laid all this out, there remains but one solution: the primary way to increase production and employment, and thereby reduce and ultimately eradicate poverty, is to cut interest rates and support production.