Economy in need of financing in 2009
Güncelleme Tarihi:
Hürriyet Daily News
Oluşturulma Tarihi: Ocak 21, 2009 00:00
ISTANBUL - Turkey might be in dire need of financing in 2009, according to a recent report released by Deloitte.
The "Economic Outlook, December 2008" report by Deloitte Turkey predicted the country would face recession starting from the last quarter of 2008 and contraction would continue until the last quarter of 2009.
The study, prepared by Murat Üçer, estimated that the current account deficit would shrink to $20 billion by the end of the year. Yet, the private sector’s long- and medium-term debt payments amount to $40 billion, while short-term debt payments are more than $50 billion, making the year ahead a difficult one in meeting financing needs.
Turkey will have a hard time in this respect, even if it cuts a deal with the International Monetary Fund, or IMF, the report said.
Still, an IMF deal is "a must" to get through 2009, Deloitte said, linking such a deal to re-establishing confidence and stability.
New IMF deal
Turkey’s previous stand-by deal with the IMF expired in May.
An IMF delegation is currently in Ankara, hammering out the details of a possible new agreement.
A second step to overcome the crisis would be creating a solid foreign financing structure, Deloitte said. Protecting monetary and fiscal discipline and continuing structural reforms would be the other steps, according to the report, released yesterday.
Debt serviceability for the public sector seems relaxed at the moment and the sector is expected to pay $10 billion in debt repayments this year, Deloitte said. But the real problem is in the private sector, according to the report.
The economy will need to find financing of $70 billion through the year, Deloitte added.
The firm also said the Turkish Lira might close the year with "a slight devaluation." While inflation is expected to decline, it will resist falling below 8 percent, the report said.
Speaking on the report, Hüseyin Gürer of Deloitte Turkey said 2009 would be a hard year for both Turkey and the world. "Appropriate policies should be implemented for the country to be put on the track of growth again," Gürer said. "Especially, foreign financing continues to be the soft belly of the economy. If we take the right steps, Turkey might leave the global crisis behind with minimal damage."
The study, prepared by Murat Üçer, estimated that the current account deficit would shrink to $20 billion by the end of the year. Yet, the private sector’s long- and medium-term debt payments amount to $40 billion, while short-term debt payments are more than $50 billion, making the year ahead a difficult one in meeting financing needs.
Turkey will have a hard time in this respect, even if it cuts a deal with the International Monetary Fund, or IMF, the report said.
Still, an IMF deal is "a must" to get through 2009, Deloitte said, linking such a deal to re-establishing confidence and stability.
New IMF deal
Turkey’s previous stand-by deal with the IMF expired in May.
An IMF delegation is currently in Ankara, hammering out the details of a possible new agreement.
A second step to overcome the crisis would be creating a solid foreign financing structure, Deloitte said. Protecting monetary and fiscal discipline and continuing structural reforms would be the other steps, according to the report, released yesterday.
Debt serviceability for the public sector seems relaxed at the moment and the sector is expected to pay $10 billion in debt repayments this year, Deloitte said. But the real problem is in the private sector, according to the report.
The economy will need to find financing of $70 billion through the year, Deloitte added.
The firm also said the Turkish Lira might close the year with "a slight devaluation." While inflation is expected to decline, it will resist falling below 8 percent, the report said.
Speaking on the report, Hüseyin Gürer of Deloitte Turkey said 2009 would be a hard year for both Turkey and the world. "Appropriate policies should be implemented for the country to be put on the track of growth again," Gürer said. "Especially, foreign financing continues to be the soft belly of the economy. If we take the right steps, Turkey might leave the global crisis behind with minimal damage."