Gov’t optimistic, works on new map
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Hürriyet Daily News
Oluşturulma Tarihi: Haziran 17, 2009 00:00
ISTANBUL - Economy Minister Ali Babacan says the government is working on a mid-term economic program, without mentioning the International Monetary Fund. Turkey would be ’the best’ among G20 nations in terms of its debt-to-gross domestic product ratio and budget, he says.
The Turkish government is preparing a new road map to reduce economic vulnerabilities as investors sound optimistic notes, saying they see opportunities for investing in the country.
Economy Minister Ali Babacan told a conference in Istanbul on Tuesday that the world’s central banks and governments must start to find ways to repair the damage that the financial crisis has caused thus far.
"Each country may take short-term measures to overcome the negative impacts of the crisis. But countries must [also] introduce mid and long-term steps," Babacan said during his speech at the 2nd Euromoney Turkey Finance and Investment Forum. "The U.S. has yet to do this. So have many countries in Europe."
Babacan called 2009 an "extraordinary year" and reiterated that his government has been taking steps to combat the global economic crisis, which has increased unemployment to historic levels and is expected to shrink the economy.
A series of measures, including tax cuts, investment incentives and employment stimulus packages, were introduced to give impetus to the economy, which is expected to contract as much as 5.1 percent this year, according to International Monetary Fund predictions.
It is expected that the budget deficit will rise for the first time in six or seven years and debt stocks will increase a bit as a result of the crisis, the minister acknowledged.
"We are well aware of the fact that this is unstable for the mid and long term. We believe it is crucial that this should put [us] on a foreseeable track with a mid-term [economic] program. We are currently working on that," he said.
In 2008, Turkey's total public net debt stock fell to 28 percent of gross domestic product, or GDP, from 61.5 percent in 2002, a level it had reached thanks to the fiscal discipline employed under the expired economic program that was implemented after the economic crisis in 2001.
According to the latest data released Monday, the budget deficit hit 610 million Turkish Liras in May Ğ compared to a 3.389-billion-lira surplus a year earlier Ğ as tax revenues fell and interest payments rose.
The government has revised its full-year budget deficit target from 10.4 billion liras to 48.3 billion liras as the global crisis reduces tax revenues and stimulus measures boost government expenditures.
Babacan said Turkey would be "the best G20 member" in terms of its debt-to-GDP ratio and budget deficit once the global financial crisis ends.
V-type recovery
Key participants in the conference also sounded optimistic notes regarding the course of the global crisis and the health of the Turkish economy.
The chairwoman of Akbank, Turkey’s largest private bank, said she expects a moderate recovery process in the global economy instead of a long-lasting recession, which would be symbolized with the letter "L."
"In other words, the contraction in the global economy has been decelerating. For the Turkish economy, our expectation is a V-typed recovery," Akbank Chairwoman Suzan Sabancı Dinçer said in her speech. "Therefore, we support the recent incentives and employment packages. We believe that the positive impacts of these measures will be seen shortly."
Dinçer also urged the maintaining of "momentum" in the European Union membership process and sustainable fiscal balance, underscoring the importance of a qualified educational system in turning Turkey’s young demographic structure into an asset.
The director of the Euromoney Conferences, Christopher Garnett, praised the Turkish companies that are taking part in infrastructure projects around the world and exporting machinery. "Turkish companies have lots of advantages over their foreign competitors," he said during his speech.
Turkish officials shed no light on future relations with the IMF, while key actors in the financial sector lightened the tone of their calls.
Turkey's previous $10 billion stand-by accord expired in May 2008 and direct talks with the IMF on a loan deal were suspended in January of this year. The government recently said it hopes talks on a major loan deal with the IMF would be concluded by the end of the summer.
Babacan did not raise the issue during his speech, nor did he respond to the questions from reporters. Dinçer also made no reference to the issue.
During an overview session on Turkish politics and economy, speakers said a deal with IMF is "not compulsory," but agreed it would help cushion the country from the impacts of the global crisis.
Tolga Ediz of Ashmore Investment said the Turkish banking system may experience difficulties in securing external financing and that an IMF contribution would provide a resource for the private sector.
"Turkey [has] lost its anchor," said Sinan Ülgen, managing partner at Istanbul Economics. "The important thing for the corporate investors is whether Turkey will be able to consolidate the reforms it implemented or not. A deal with IMF will provide relief to the investors because the EU anchor is not as strong as it used to be."
A financial analyst was more pessimistic when responding to questions from the Hürriyet Daily News & Economic Review. "For the medium and longer term, there is no doubt that Turkey needs the IMF," the analyst said, speaking on condition of anonymity. "The lack of an IMF deal is expected to reduce by 1 percent the growth rate of the Turkish economy in 2009."
Economy Minister Ali Babacan told a conference in Istanbul on Tuesday that the world’s central banks and governments must start to find ways to repair the damage that the financial crisis has caused thus far.
"Each country may take short-term measures to overcome the negative impacts of the crisis. But countries must [also] introduce mid and long-term steps," Babacan said during his speech at the 2nd Euromoney Turkey Finance and Investment Forum. "The U.S. has yet to do this. So have many countries in Europe."
Babacan called 2009 an "extraordinary year" and reiterated that his government has been taking steps to combat the global economic crisis, which has increased unemployment to historic levels and is expected to shrink the economy.
A series of measures, including tax cuts, investment incentives and employment stimulus packages, were introduced to give impetus to the economy, which is expected to contract as much as 5.1 percent this year, according to International Monetary Fund predictions.
It is expected that the budget deficit will rise for the first time in six or seven years and debt stocks will increase a bit as a result of the crisis, the minister acknowledged.
"We are well aware of the fact that this is unstable for the mid and long term. We believe it is crucial that this should put [us] on a foreseeable track with a mid-term [economic] program. We are currently working on that," he said.
In 2008, Turkey's total public net debt stock fell to 28 percent of gross domestic product, or GDP, from 61.5 percent in 2002, a level it had reached thanks to the fiscal discipline employed under the expired economic program that was implemented after the economic crisis in 2001.
According to the latest data released Monday, the budget deficit hit 610 million Turkish Liras in May Ğ compared to a 3.389-billion-lira surplus a year earlier Ğ as tax revenues fell and interest payments rose.
The government has revised its full-year budget deficit target from 10.4 billion liras to 48.3 billion liras as the global crisis reduces tax revenues and stimulus measures boost government expenditures.
Babacan said Turkey would be "the best G20 member" in terms of its debt-to-GDP ratio and budget deficit once the global financial crisis ends.
V-type recovery
Key participants in the conference also sounded optimistic notes regarding the course of the global crisis and the health of the Turkish economy.
The chairwoman of Akbank, Turkey’s largest private bank, said she expects a moderate recovery process in the global economy instead of a long-lasting recession, which would be symbolized with the letter "L."
"In other words, the contraction in the global economy has been decelerating. For the Turkish economy, our expectation is a V-typed recovery," Akbank Chairwoman Suzan Sabancı Dinçer said in her speech. "Therefore, we support the recent incentives and employment packages. We believe that the positive impacts of these measures will be seen shortly."
Dinçer also urged the maintaining of "momentum" in the European Union membership process and sustainable fiscal balance, underscoring the importance of a qualified educational system in turning Turkey’s young demographic structure into an asset.
The director of the Euromoney Conferences, Christopher Garnett, praised the Turkish companies that are taking part in infrastructure projects around the world and exporting machinery. "Turkish companies have lots of advantages over their foreign competitors," he said during his speech.
Turkish officials shed no light on future relations with the IMF, while key actors in the financial sector lightened the tone of their calls.
Turkey's previous $10 billion stand-by accord expired in May 2008 and direct talks with the IMF on a loan deal were suspended in January of this year. The government recently said it hopes talks on a major loan deal with the IMF would be concluded by the end of the summer.
Babacan did not raise the issue during his speech, nor did he respond to the questions from reporters. Dinçer also made no reference to the issue.
During an overview session on Turkish politics and economy, speakers said a deal with IMF is "not compulsory," but agreed it would help cushion the country from the impacts of the global crisis.
Tolga Ediz of Ashmore Investment said the Turkish banking system may experience difficulties in securing external financing and that an IMF contribution would provide a resource for the private sector.
"Turkey [has] lost its anchor," said Sinan Ülgen, managing partner at Istanbul Economics. "The important thing for the corporate investors is whether Turkey will be able to consolidate the reforms it implemented or not. A deal with IMF will provide relief to the investors because the EU anchor is not as strong as it used to be."
A financial analyst was more pessimistic when responding to questions from the Hürriyet Daily News & Economic Review. "For the medium and longer term, there is no doubt that Turkey needs the IMF," the analyst said, speaking on condition of anonymity. "The lack of an IMF deal is expected to reduce by 1 percent the growth rate of the Turkish economy in 2009."