Turkey Financial News

Posted by meb at November 28th, 2008

The government is planning to bring about a corporate tax exemption for company mergers for up to two years as an attempt to encourage such cooperation in its economic package, which aims to protect the Turkish non-financial sectors from the global financial crisis.

Citing anonymous sources, the Anatolia news agency reported yesterday that the economic package will include a number of radical policy changes and measures. One of the most important steps the package will introduce will be temporarily exempting mergers from corporate taxes. Since the financial structures of many companies have deteriorated greatly due to the financial crisis, the government is aiming to make it easier and more attractive for companies to merge their businesses instead of filing for bankruptcy. In the current system, the collection of the corporate tax is postponed until the bankrupted or merged company is liquidated completely. Economy officials have not determined the duration of the exemption during which the merged companies will not pay corporate taxes, but they are contemplating one-year or two- year options. (more…)

Posted by meb at November 21st, 2008

In a move that took the markets by surprise, the Turkish Central Bank decided on Wednesday night to lower interest rates.

After a two-hour Monetary Policy Committee (PPK), the bank announced that it had cut the overnight borrowing rate by 0.5 points from 16.75 to 16.25 percent and the overnight lending rate by 1 point to 18.75 from 19.75 percent. In a written statement yesterday, the bank also said that the sharp decline in oil and other commodity prices would have a favorable impact on efforts to curb inflation.

The markets had anticipated that the central bank would leave interest rates unchanged, so the cut was received with surprise by investors. Reactions to the bank’s interest decision were not positive in the markets yesterday. The İMKB dropped 701 points on Thursday. The index closed at 21,228.27 points, and stocks had lost 3.20 percent of their value by the end of the day. The currency market was also turbulent as one dollar was traded for as high as YTL 1.74 in the free market. In the interbank market, the highest level reached in YTL/dollar trading was 1.71, while the indicator T-bill with a maturity date of June 23, 2010 was being traded for 22.55 percent at 12:00 p.m. (more…)

Posted by meb at November 14th, 2008

The international credit rating agency, Standard & Poor’s (S&P), revised Turkey’s credit outlook to negative from stable, saying the downside risks are more significant.

S&P also said it affirmed its ‘BB-/B’ foreign currency and ‘BB/B’ local currency sovereign credit ratings and its ‘BB+’ transfer and convertibility assessment on Turkey.

“The outlook revision follows a shift in the balance of risks to the downside as external financing conditions remain difficult,” S&P credit analyst David T. Beers said in a written statement late on Thursday.

“Although we expect Turkey’s current account to narrow in 2009 from a projected deficit of 7.3 percent of GDP in 2008, 2009 gross external financing needs will exceed 14 percent of 2009 current account receipts plus usable international reserves. This is one of the higher ratios among emerging market countries.” (more…)

Posted by meb at November 13th, 2008

Turkey’s budget deficit was 31 percent lower in October than the same month in 2007, the Turkish Finance Ministry announced yesterday in a written statement.

The budget deficit for October was YTL 70.8 million, signaling that the government was somewhat successful in its efforts to maintain a disciplined fiscal system. The statement also said the 10-month primary surplus was 18.7 percent higher than the same period last year, reaching YTL 38.4 billion. According to budget totals for January to October 2008 released by the ministry, Turkey’s total budget deficit was YTL 4.9 billion for this period. From January to October 2008, budget expenditures were up 7.4 percent, while budget revenue increased by 12.7 percent. The budget deficit for the first 10 months of the year was 60.2 percent less than the same period last year. Budget revenue climbed to YTL 175.8 billion in this period. Turkey set its year-end budget revenue target to around YTL 204.5 billion. The 10-month figure indicates that Turkey has achieved 85.9 percent of this target so far.

Figures on budget performance in October 2008 made public by the ministry showed a primary surplus of YTL 1.9 billion. The ministry announced budget expenditures of YTL 15.2 billion against budget revenue of YTL 15.1 billion in October 2008. (more…)

Posted by meb at November 12th, 2008

Turkey needs $130 billion in foreign financing in 2009, resulting from short-term debt that needs to be rolled over, World Bank country director Ulrich Zachau told a conference on Wednesday.

The World Bank sees no problem with rolling over this debt, Zachau added in his speech at the International Finance Summit held in Istanbul.

Investors have been withdrawing from the Turkish economy as the global financial crisis has spread into emerging market economies and raised fears that some countries would be unable to finance their large current account deficits. (more…)

Posted by meb at November 11th, 2008

Turkey’s gross domestic product would reach $968.2 billion in 2013 according to the figures made public by the International Monetary Fund (IMF) on Tuesday.

Predictions made by the IMF for the period 2008-2013 showed that Turkey would maintain the title of the world’s 17th largest economy until 2013. (more…)

Posted by meb at November 11th, 2008

Jean Maurice Verbois, the economy undersecretary of the French Embassy in Ankara, said yesterday he believed that Turkey will withstand the first wave of the current financial turmoil. “Turkey has a well-established banking system,” he said, adding that public expenditures are also balanced in Turkey.

Verbois visited the Bursa Trade and Industry Chamber (BTSO) yesterday along with 26 other economic councilors from EU countries to evaluate the current position of Turkish economy against the crisis. He said Turkey will not be spared from the crisis but that the negative effects will not be as harsh as in many other countries. “The Turkish automotive sector will be hit by the crisis since the demand in the global auto market has decreased a lot,” he said. (more…)

Posted by meb at November 10th, 2008

The current financial crisis will mainly inflict its damage on the Turkish economy through four conduits, and the government has only a limited amount of time to start a comprehensive plan to avert the effects with the least amount of harm, a recent report has said.

The Economic Policy Research Foundation of Turkey (TEPAV), which is the think tank of Turkey’s largest businessmen’s organization, the Turkish Union of Chambers and Commodity Exchanges (TOBB), has claimed in a recent report that the crisis will show its effects through loans, customer portfolios, foreign trade and consumer behavior.

TEPAV noted in its report, titled “2007-08 Global Financial Crisis and Turkey: Effects and Proposals,” that the crisis is well poised to hit the Turkish economy and the government must be faster in launching safeguards against the crisis. (more…)