Good news from G20 is crucial for Turkey

I can briefly summarize the good news as a "major foreign fund".�

Because, the Turkish economy at this point in time is urgently in need of a major amount of foreign funding. The calculation is very simple, the current account deficit is hovering close to $50 billion, with a similar level of foreign debt repayment due, and previous sources that had created a foreign exchange fund, including privatizations and short term capital inflow, have stopped.

Aside from the finance required for the current account deficit, at least $30-$40 billion is needed for the repayment of foreign debt due in the first six months of 2009. It is impossible for the macro balances to remain stability unless this amount of foreign currency is provided. It is also impossible to resort to the use of the foreign exchange deposits funds or the foreign exchange reserve for this purpose. If you reach the point that you need to make use of these funds it means that things have already derailed.

Two alternatives are available that will ensure this amount of funding. Either you ensure that a credit line is available in the form of a bridging loan or you take out a medium term loan. We know that the government hopes to access a line of credit from the Fed, but I don't think that it will be so easy. At a time when the risk appetite is very low, I assume it will be very difficult to ensure a line of credit from Arab countries, even if this is also being spoken as another alternative.

An International Monetary Fund (IMF) agreement with aid is the most reasonable solution. Within the context of this agreement it has been suggested that Turkey needs at least $20-$25 billion of fresh IMF funding combined with a suspension of repayments for 1 to 1-1/2 years.

Do you think that making an agreement with the IMF and ensuring these funds alone will be sufficient to solve the problem completely? From my point of view, no. But it could improve sentiment and calm the markets for a couple of months. The new arrangements should be established after seeing how close the IMF program comes to meeting the requirements.

FUTURE DIFFICULT WITH CURRENT ECONOMY UNDERSTANDING

Firstly, a good economy administration is required to achieve this target...

But, unfortunately such an administration does not exist at this time. As a result, panic in the markets increases making the measures all the more urgent.

If we remember the past... We has said that the latest IMF program was finalized 2 to 2-1/2 years ago and a new economic vision was required and that a fresh fund was needed to maintain Turkey's high and constant growth. But the government failed to take our suggestions into consideration.

As the deal with the IMF expired in May and the impact of the crisis started to take affect, calls to “immediately make a deal; make the resources available” were made, but still no progress has been made…

Now it is November…Some 10 countries are working to complete their missions to formulate agreements with the IMF for support. Some of them have reached agreement; the others are waiting in line. In other words, the IMF’s “lone success story”, Turkey, at this point in time, is still not even listed among those countries negotiating an agreement.

The point reached in the global crisis has still not been fully realized, from the United States, not just one, but two huge waves are said to be headed our way, and Europe’s situation is also expected to worsen…

In summary, Turkey faces a very dim future if nothing new is forthcoming at the G20 summit.