Turkey Financial News

Posted by meb at July 18th, 2009

The Finance Ministry expects to add some TL 1.4 billion in extra revenue to its coffers thanks to a recent tax hike on fuel. The government announced on Wednesday that the private consumption tax (ÖTV) would increase by Kr 20 for gasoline, Kr 15 for diesel and Kr 10 for liquefied petroleum gas (LPG), sparking outrage from consumers. Fuel distribution companies had to raise their prices on Thursday, bringing further criticism against the government and fuel market regulators. The Finance Ministry expects to take in an anticipated TL 1.4 billion this year from the tax hikes.

Data from the Petroleum Industry Association (PETDER) show that fuel consumption in Turkey was 3 million cubic meters in 2008; this number is expected to decline by roughly 6 percent this year. However, despite the decline, the state will still make a considerable amount of money with the latest price increases. Based on PETDER’s estimation, the Finance Ministry will earn TL 290 million from gasoline, TL 1 billion from diesel and TL 110 million from LPG taxes in the second half of this year.

Alleging that the increasing tax rates have an unfair impact on competition in the market, sector representatives argue that many fuel dealers are facing bankruptcy. In particular, many small distributors are losing strength, and some are closing down their shops. The ÖTV on gasoline makes up 69 percent of the total cost to consumers, 61 percent for diesel and 63 percent for LPG. (more…)

Posted by meb at July 18th, 2009

The Central Bank of Turkey again slashed its benchmark interest rate on Thursday evening, this time by 50 basis points, representing the ninth month in a row that rates have been cut. The overnight borrowing rate now stands at a record low of 8.25 percent — a full 8.5 percentage points lower than the 16.75 percent overnight borrowing rate in September.

The bank has suggested that more cuts are in store. In a written statement accompanying the announcement, the bank said it was likely for the cuts to continue, noting, “Recent data releases signal that the recovery in domestic economic activity will be slow and protracted.”

Because inflation concerns remain a distant possibility, “it will be necessary for monetary policy to maintain an easing bias for a long period of time,” the statement read, adding that the bank “envisages that further rate cuts will be necessary in the short term unless there is a robust recovery in economic activity.”

Indeed, first quarter gross domestic product (GDP) contraction clocked in a record 13.8 percent, driven in large part by slumping domestic demand, plummeting exports and a fall of 17.4 percent in industrial production. (more…)

Posted by meb at July 17th, 2009

The government has given the go-ahead to the state-owned Turkish Petroleum Corporation (TPAO) to explore for oil in international waters in the Mediterranean Sea for one year.

Ankara’s move in the eastern Mediterranean, off the coast of Cyprus, is likely to stir up the waters since it will probably be interpreted by many as a show of its determination to protect its rights and interests in the region when faced with a unilateral Greek Cypriot move vis-à-vis the exploration.

A governmental decree authorizing the TPAO to explore for oil beyond Turkish territorial waters in the Mediterranean went into effect on Thursday after publication in the Official Gazette. According to the decree, published after Cabinet approval, the regions where the TPAO will launch geological surveys are four separate areas, two in the Antalya Basin and two in the Muğla Basin. The four blocs in total comprise more than 2 million hectares of area. Last month, Greek Cyprus stated that it would press on with offshore oil exploration, despite strong objections from Turkey, and would open new fields for hydrocarbon research by early next year.

Only a few days after this statement, it raised the stakes in the dispute, saying Turkey’s objection would further impede its regional rival’s effort to join the European Union. The first exploration deal by Greek Cyprus was clinched with US company Noble Energy, which has already found a large gas reservoir off the coast of nearby Israel. In response, Ankara urged third parties to use “common sense” in avoiding becoming party to actions that might be harmful to ongoing reunification talks between Greek and Turkish Cypriot leaders, while also expressing determination in protecting its rights in the Mediterranean Sea.

“The Turkish Cypriot people have rights there [in the eastern Mediterranean]. You cannot ignore this. Turkey also has rights and interests there. Our intention to protect them is known by everyone,” Foreign Ministry spokesman Burak Özügergin told reporters last month, when he also labeled Greek Cypriot actions on this issue as “in a word — adventurous.” (more…)

Posted by meb at July 17th, 2009

Best Buy, the largest US consumer electronics retailer, will enter the Turkish market in October.

As part of the company’s expansion plans, Best Buy will open its first store in the western province of İzmir. The US company plans to open two more stores by the end of the first quarter of 2010, one in the capital city of Ankara and the other in another western province, Bursa. TeknoSA, Turkey’s largest consumer electronics retailer, has over 220 stores spread throughout 67 cities in Turkey and employs over 3,000 people. (more…)

Posted by meb at July 17th, 2009

The Nabucco pipeline, which will carry Caspian andMiddle Eastern gas to Europe via Turkey, will be designed to operate in the opposite direction in order to provide for the energy needs of Turkey in times of crisis. Turkey was right to be concerned about its own energy security, says EUCommissioner Piebalgs, adding Ankara got what it wanted

The intergovernmental agreement on the Nabucco pipeline project, which will bring Caspian and Middle Eastern natural gas to Europe, puts into place the physical infrastructure to alleviate Turkey’s concerns for its own energy needs, a senior European commissioner has said.

Turkey got what it wanted and probably more than it wanted, Andris Piebalgs, European commissioner on energy issues told Hürriyet Daily News & Economic Review. Piebalgs answered questions from the Daily News in a written interview ahead of the signing ceremony for the agreement that will take place on Monday in Ankara. Piebalgs will come to Turkey to attend the ceremony for the agreement, which took years to negotiate.

One of the reasons for the delay was Turkey’s request for part of the gas allocated for its own needs. (more…)

Posted by meb at July 17th, 2009

Some 2,000 kilometers of the 3,300-kilometer Nabucco pipeline will run through Turkish territory. That is why Ankara expects to receive about 400 million to 450 million euros annually under an intergovernmental agreement to be signed Monday
The proposed 3,300-kilometer Nabucco pipeline, hailed by Ankara as the project of the 21st century, will not only tighten the bond between Turkey and the European Union but will also bring financial gains.

Because 2,000 kilometers of the pipeline will run through Turkish territory, Turkey expects to receive 60 percent of tax revenues or about 400 million to 450 million euros annually under an intergovernmental agreement to be signed Monday, said Foreign Ministry officials.

Prime Minister Recep Tayyip Erdoğan will host the Nabucco summit in Ankara, to be attended by the prime ministers of the transit countries that the pipeline will cross -Bulgaria, Romania, Hungary and Austria – as well as EU Commission President Jose Manuel Barroso, U.S. Special Envoy for Eurasian Energy Richard Morningstar, Georgian President Mikhail Saakashvili and potential supply countries’ ministers.

Ankara sent an invitation to Russia for the multinational summit but has received no response so far, said officials. (more…)