ISTANBUL, Nov 22 (Reuters) - Ratings agency Standard & Poor's on Friday affirmed its 'BB+' sovereign credit rating on Turkey with a stable outlook saying strong growth prospects were balancing risks from its persistent current account deficit and expensive external financing.
'Turkey's dependence on external financing remains significant, but we note that monetary policy flexibility and meaningful scope for fiscal expansion provide important buffers,' S&P said.
The agency raising Turkey to BB+ in March, one notch below investment grade. Both Fitch and Moody's rate Turkey at investment grade.
The agency, which has a rocky relationship with Turkey, converted its ratings to 'unsolicited' in January, meaning it is not paid by the country to provide cover but does so anyway.
The agency said it expected the weaker Turkish lira, stemming partly from changes in the global environment, to contribute to an increase in Turkey's net external liability position to 62 percent of gross domestic product this year.
It said the key ratings constraint continued to be Turkey's high external risks, which are associated with its large current account deficit and substantial net external liability position.
'Given its large external funding needs, we believe that Turkey will be among the most vulnerable emerging sovereigns if global liquidity dwindles,' it said.
It projected annual growth of about 3 percent for 2013, accelerating to 3.6 percent in 2014.
S&P said there was a less than one-in-three likelihood that it raise or lower our ratings on Turkey within the next year.
It said it could consider raising the ratings if Turkish authorities continue to implement fiscal and monetary policies that are independent of election-cycle considerations and support more balanced economic growth.
It could lower the ratings if credit growth accelerates further, relative to GDP, if current account deficits widen substantially or if external leverage of the Turkish economy increases materially.
(Writing by Daren Butler; Editing by Nick Tattersall) Keywords: TURKEY S&P/
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