Crisis recovery budget drafted without reference to IMF deal

Posted by meb at October 19th, 2009

The central administration budget for 2010, which focuses on overcoming the economic crisis, was submitted for Parliament’s approval on Saturday and includes no specific reference to a potential stand-by deal with the International Monetary Fund (IMF).

Disclosing the details of the new budget at a press conference on Saturday, Finance Minister Mehmet Şimşek said Turkey had prepared its budget while taking into consideration its own needs and the conditions arising from the economic crisis, underlining that talks with the IMF would “proceed on the premises set out in the budget.”

The size of the 2010 budget is TL 286.93 billion. It includes a 5.06 percent wage increase for civil servants, in two equal semiannual installments of 2.5 percent. With expected revenue of TL 236.8 billion, the deficit will be approximately TL 50 billion.

According to experts, Finance Ministry bureaucrats maintained caution while drafting the budget. The economic gloom in Turkey will persist next year, and the government will stick to its policy of fiscal discipline, they note. (more…)

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IMF chief: Growth of Turkish economy could exceed expectations

Posted by meb at October 5th, 2009

If Turkey continues to pursue sound economic policies, its economy could perform better than current estimates, International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn said on Sunday.

Strauss-Kahn, who is currently in Ä°stanbul to attend the 2009 Annual Meetings of the World Bank Group and the International Monetary Fund, noted that he expected the Turkish economy to recover rapidly from the ongoing global economic crisis, saying that the Turkish economy has made great progress thanks to reforms previously implemented in the financial sector. As a member of the G-20, which forms the backbone of the global economy, he said, Turkey is not only one of the leading economies of the world, but also a dynamic member of the IMF.

According to the fund’s latest World Economic Outlook, released last week, Turkey’s economy is expected to grow 3.7 percent in 2010, after a global recession caused the country’s economy to contract an estimated 6.5 percent this year. The inflation rate in the country is expected to stand at 6.2 percent this year before increasing to 6.8 percent in 2010. The report estimated that Turkey’s current account deficit to gross domestic product (GDP) ratio would increase from 1.9 percent this year to 3.7 percent in 2010. Furthermore, Turkey’s quota in the IMF is expected to increase to more than 1 percent. Analysts note that the Turkish economy will be the fastest growing in Europe in 2010. (more…)

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Roubini advises IMF deal for Turkey

Posted by meb at October 5th, 2009

Turkey does not ‘technically’ need a standby agreement with the International Monetary Fund, according to Professor Nouriel Roubini, who was among the first to predict the current global crisis. But, he says, a deal would give confidence to investors. ‘Instead of just waiting for a recovery in the European Union, Turkey should also diversify its export markets,’ he says

The collapse in European Union demand coupled with receding foreign capital inflows makes a standby agreement with the International Monetary Fund desirable for Turkey, according to New York University Professor Nouriel Roubini.

Roubini, who predicted the crippling financial crisis as early as 2006, told a crowded audience in Istanbul that a global recovery will probably be U-shaped – slow and with low growth rates for years. Speaking at an İş Investment-sponsored event Friday evening, the economist, dubbed “Dr. Doom,” said unprecedented central bank interventions helped mitigate the “systemic risk” to the world economy but that downside risks remain.

“The Turkish economy was fundamentally sound in the eve of the crisis,” he said. “But then the contagion came, resulting in a collapse in European Union demand [for Turkish goods]. The corporate sector halted capital expenditure investments. Turkey is a very open economy and its recovery depends on the recovery of the eurozone.” (more…)

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Minister unveils plan to turn Istanbul into global finance center

Posted by meb at October 5th, 2009

Discussed for months but never detailed, key points of a government plan to turn Istanbul into a global financial center were finally revealed by a top minister on Friday.

Speaking at a press conference organized as part of the International Monetary Fund-World Bank annual meetings, Deputy Prime Minister Ali Babacan said Istanbul would soon become “a significant and prominent financial center.” Babacan tied the effort to the “void” created by the global financial crisis.

“Istanbul is the natural finance center of Turkey,” he told journalists. “We need to increase its competitive power regionally and globally. The competitive strength of our economy is very important.”

The project “Istanbul International Financial Center,” or IFC Istanbul, is included in the ninth development plan covering 2007-2013.

“In this action plan, in order to have Istanbul as a global finance center, priorities have been determined to build a legal infrastructure that operates on international standards, to increase diversity of financial products and services and to develop a simple and effective system,” said Babacan. “We need to enhance our legal infrastructure.” (more…)

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Turkish FM: “Turkey seeks EU membership by 2015”

Posted by meb at October 3rd, 2009

Turkey is counting on joining the European Union by 2015 to bolster both its and the EU’s global role, Foreign Minister Ahmet Davutoğlu said on Friday. “Even 2015 is too late, not only for us, it will be too late for the EU as well,” Davutoğlu said at the European Policy Centre in Brussels.

The Turkish foreign minister also said Turkey and the EU were sharing a common destiny, history and fate, adding: “Our vision is to make an EU, including Turkey, a global power in 2050.”

Turkey has made piecemeal progress toward becoming the EU’s first predominantly Muslim member since the process started in 2005, opening talks in 11 of 35 policy areas and completing one. The EU froze talks in eight areas in 2006 to punish Turkey for its trade embargo on Greek Cyprus, which joined the bloc in 2004. The dispute with Greek Cyprus has dogged entry talks since the debut.

The Turkish foreign minister blamed Greek Cypriot President Dimitris Christofias for stalling unity talks after 42 meetings within a year. “Unfortunately, Christofias is trying to slow down the negotiations,” he said. “Nobody can blame Turkey. We did everything and continue to do everything.” (more…)

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Zoellick foresees slow recovery

Posted by meb at October 3rd, 2009

World Bank President Robert Zoellick said the global economy will recover slowly from its worst recession since World War II and the Washington-based lender may require a capital increase to meet developing countries’ financing needs.

“We’ve broken the fall of the financial crisis,” Bloomberg quoted Zoellick as saying at a news conference in Istanbul on Friday. Still, 2009 “will continue to be a difficult year” and “you’ll have a slow recovery,” he said.

“There are potential challenges for Turkey’s recovery,” he said. “We are expecting a slow recovery for Turkey. The biggest challenge for Turkey might be protectionism.”

The medium-term economic program announced last month is “sound,” Zoellick said. “Turkey has the growth potential with its dynamic youth, but the biggest problem is unemployment.” (more…)

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No sideline agreement for Turkey and IMF in Ä°stanbul

Posted by meb at October 3rd, 2009

Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF), put to rest yesterday speculation that an IMF agreement would be signed with Turkey on the sidelines of the Ä°stanbul summit, during a press conference when he answered reporters’ questions about the status of the ongoing relations with the fund.

“We discussed with [Economy Minister Ali] Babacan that it would be inappropriate to discuss [a new standby agreement] during the meetings,” he said, noting that negotiations would resume after the summit. He said they would use the annual meetings to hold multilateral meetings and work out the larger issues of the day and not use them for bilateral meetings.

Strauss-Kahn also challenged the common belief that the IMF was actively pursuing Turkey for an agreement. “We help countries that want our help,” he said, adding that “the IMF is not a bank; we are not looking for customers.” (more…)

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Shoe-throwing protest draws ire from many Turks

Posted by meb at October 3rd, 2009

The shoe-hurling protest of a student-journalist directed toward International Money Fund (IMF) Managing Director Dominique Strauss-Kahn on Thursday has drawn massive criticism from a majority of the Turkish public, while some perceived it as a sign of Turks’ suspicion of and disillusion with the IMF.

The incident took place during Strauss-Kahn’s speech to students at Ä°stanbul Bilgi University earlier on Thursday. Turkish student Selçuk Özbek, 24 — who is also a journalist for the small left-wing newspaper Birgün — threw his white sports shoe at Strauss-Kahn, but the shoe fell short hitting him. Another student tried to unfurl a banner but was overpowered by security teams. Both students were detained by the police but were later released.

British business newspaper the Financial Times said the incident was considered to be a reflection of the deep distrust of the IMF in the country hosting the meetings. The daily asserted that Turkey’s propensity for economic crises made it one of the IMF’s most assiduous clients. “Many Turks blame the IMF for fostering a reliance on external funding, with one columnist likening relations to those ‘between the drug addict and the drug dealer.’ But 18 loans later, and after a year of on-off talks over a new financing package, the government is determined to prove it is no longer reliant on either the IMF’s money or its policy blueprints,” the daily reported. (more…)

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