Heavyweights point toward IMF
Güncelleme Tarihi:
Hurriyet Daily News
Oluşturulma Tarihi: Mayıs 29, 2009 00:00
ISTANBUL - Key participants at the Forum Istanbul summit increase pressure on the government to deal with the International Monetary Fund. A standby deal can provide a short-term benefit for Turkey, they agree. But in the long-term, the focus should be on structural reforms.
Participants at the Forum Istanbul 2009 held at the Swissotel zeroed in on the causes and possible solutions of the global economic crisis.
Relations between the International Monetary Fund and Turkey were also an important topic of the meeting. Kemal Derviş, the Brooking Institute's newly appointed vice president, said he does not know the details of the discussions between IMF and Turkey. However, he said, it is obvious that IMF has the interest rate and cost adequate for the financial resources.
Responding to a question whether Turkish government was following a strategy based on acting as if it was going to sign a deal with IMF and then pull away, Derviş said: "There is no such strategy." It’s good to be transparent at all times, said Derviş, who is Turkey’s former economy minister, and also the former chief of the United Nations Development Program.
"We have set certain conditions. For example, we have told them we cannot restrict our fiscal policies when there is so much distress. However, in the long term, we will do all that is necessary, in transparency. If Turkey can convince IMF to that, then I believe a new standby agreement would become possible. It would also be beneficial for the country," said Derviş. "But, Turkey can only benefit from an IMF deal in the short term. In the long run the country needs to focus on regulating its fiscal policies."
"In the short run signing a loan deal with IMF deal can be an effective solution for Turkey’s current troubles. However, IMF can not only provide insurance, not a long term solution for Turkey," said Anne Kreuger, IMF first deputy managing director.
On the crisis
Liquidity abundance and inefficient regulatory mechanisms caused the global economic crisis, said Dani Rodrick, a professor of international political economy at the John F. Kennedy School of Government, Harvard University. "If one of these factors was missing, the crisis woudln never have happened."
Foundation of effective regulatory mechanisms is a must, said Rodrick. Currency exchange policies should be kept under strict supervision at a global level, he said and added that a tight discipline must be in place. A financial stability committee should be created and IMF needs to get a facelift, said Rodrick. This globalization period will be followed by a de-globalization period, he said. Regarding Turkey, Rodrick said the county, which has strong internal dynamics, should reduce its dependency on foreign borrowing. "That would only be possible by increasing internal savings. Public savings should be increased. Private savings should be encouraged," he said.
Deputy Prime Minister Ali Babacan was also present at the meeting but had to leave early to attend another program. "The world is battling with a major liquidity crunch and rapidly growing unemployment figures. The situation isn’t any different in Turkey," said Babacan. All economies have been contraction and Turkey is too, he added.
The crisis had a serious impact on the country’s industrial output as well as its export figures and employment in the country took a blow, he said. However, the country’s banking system is still standing tall, he added.
Relations between the International Monetary Fund and Turkey were also an important topic of the meeting. Kemal Derviş, the Brooking Institute's newly appointed vice president, said he does not know the details of the discussions between IMF and Turkey. However, he said, it is obvious that IMF has the interest rate and cost adequate for the financial resources.
Responding to a question whether Turkish government was following a strategy based on acting as if it was going to sign a deal with IMF and then pull away, Derviş said: "There is no such strategy." It’s good to be transparent at all times, said Derviş, who is Turkey’s former economy minister, and also the former chief of the United Nations Development Program.
"We have set certain conditions. For example, we have told them we cannot restrict our fiscal policies when there is so much distress. However, in the long term, we will do all that is necessary, in transparency. If Turkey can convince IMF to that, then I believe a new standby agreement would become possible. It would also be beneficial for the country," said Derviş. "But, Turkey can only benefit from an IMF deal in the short term. In the long run the country needs to focus on regulating its fiscal policies."
"In the short run signing a loan deal with IMF deal can be an effective solution for Turkey’s current troubles. However, IMF can not only provide insurance, not a long term solution for Turkey," said Anne Kreuger, IMF first deputy managing director.
On the crisis
Liquidity abundance and inefficient regulatory mechanisms caused the global economic crisis, said Dani Rodrick, a professor of international political economy at the John F. Kennedy School of Government, Harvard University. "If one of these factors was missing, the crisis woudln never have happened."
Foundation of effective regulatory mechanisms is a must, said Rodrick. Currency exchange policies should be kept under strict supervision at a global level, he said and added that a tight discipline must be in place. A financial stability committee should be created and IMF needs to get a facelift, said Rodrick. This globalization period will be followed by a de-globalization period, he said. Regarding Turkey, Rodrick said the county, which has strong internal dynamics, should reduce its dependency on foreign borrowing. "That would only be possible by increasing internal savings. Public savings should be increased. Private savings should be encouraged," he said.
Deputy Prime Minister Ali Babacan was also present at the meeting but had to leave early to attend another program. "The world is battling with a major liquidity crunch and rapidly growing unemployment figures. The situation isn’t any different in Turkey," said Babacan. All economies have been contraction and Turkey is too, he added.
The crisis had a serious impact on the country’s industrial output as well as its export figures and employment in the country took a blow, he said. However, the country’s banking system is still standing tall, he added.