ANKARA: Turkiye is celebrating a significant milestone after the international crime watchdog Financial Action Task Force on Friday removed it from its “gray list” of countries requiring special scrutiny, boosting the country’s economic turnaround plan.

“We have made it,” Treasury and Finance Minister Mehmet Simsek wrote on social media platform X.

The decision came during the concluding plenary session of the FATF in Singapore.

The decision by the watchdog — which was set up by the G7 group — is expected to have profound implications for Turkey’s economic landscape, bolstering confidence in the Turkish economy, lira, and assets.

International banks and investors occasionally base their risk assessments on the FATF rankings.

However, experts are mostly cautious about the immediate effects of the delisting decision on the Turkish economy.

They said that political stability, the rule of law, and more orthodox economic policies also played a role in attracting foreign investment.

Turkey has been gray-listed since 2021 for its failure to combat money laundering and terrorism financing to groups such as Al-Qaeda and Daesh.

A team from the FATF visited Turkey in early May to assess Turkey’s longstanding efforts to curb illicit money flows, including further examinations against UN-designated terrorist groups.

Turkey recently enacted legislation governing cryptocurrencies to enhance oversight and align with international standards.

This move is anticipated to appease FATF’s concerns, fortifying the country’s crypto infrastructure against potential exploitation for illicit purposes.

In parallel efforts, Turkiye has implemented measures to scrutinize social media influencers for any signs of financial impropriety, underscoring its commitment to combating illicit financial flows.

Simsek and Interior Minister Ali Yerlikaya led the efforts, concentrated on fighting organized crime and terrorism funding.

Last year, more than 3,000 suspects were caught and properties worth $3.2 billion were confiscated in nationwide operations.

Meanwhile, during ongoing economic policy deliberations, President Recep Tayyip Erdogan reiterated his stance against high interest rates, asserting his belief that lower rates will curb inflation.

The Central Bank, buoyed by a record-high net reserve of $146 billion, maintained its benchmark interest rate at 50 percent for a third consecutive month, anticipating a potential rate cut later this year.

Looking ahead, Fitch Ratings has revised its growth forecast for Turkey’s economy upwards to 3.5 percent for 2024, reflecting cautious optimism.

Wolfango Piccoli, co-president of London-based Teneo Intelligence, told Arab News: “The removal from the FATF’s gray list is a positive development that adds credibility to Ankara’s economic turnaround plan.”

However, for Piccoli and many other experts, it is unlikely to immediately affect the inflow of foreign capital and investment.

“It may boost confidence in the country’s financial system, but there are still concerns about Turkey’s role in helping Hamas to fund itself,” Piccoli said.

He said that several Turkish companies were “sanctioned by the treasury for bypassing Russia-related sanctions.”

But one thing is clear, as the International Monetary Fund asserted in a 2021 report, countries that are gray-listed by the FATF face difficulties in attracting short-term capital inflows equivalent to 3 percent of gross domestic product and an additional drop in foreign direct investment.

On Tuesday, Washington imposed new sanctions on nearly 50 entities and people for alleged involvement with a “shadow banking network” accused of moving billions of dollars to the Iranian military.

An Iranian-Turkish money-changer and a Turkiye-based currency exchange company were on the list.

Prof. Cem Cakmakli, an economist at Koc University in Istanbul, remains cautious and says that FATF’s delisting will not directly affect the economy.

“The share of foreigners in the treasury bond market had plummeted close to zero amid the backdrop of low interest rate policies amid rising inflation,” he told Arab News.

“Consequently, exiting the gray list is unlikely to reverse this trend of diminished foreign involvement.”

Cakmakli said the primary advantage of being taken off the gray list would probably be manifested through potential credit rating upgrades from global agencies. However, he cautioned that substantial progress is necessary to achieve more favorable ratings.

“There’s still a considerable journey ahead to attain more meaningful ratings,” Cakmaklı said, emphasizing the importance of sustained policy coherence in Turkey’s economic strategy.

“It’s crucial to uphold rational economic policies. We require at least five additional rating upgrades to attain investment-grade status,” the economist said.