Turkish economy can overcome global economic turmoil (24.01.2008)

Unakitan: Turkish economy can overcome global economic turmoil

"Turkey's economic structure is strong enough to handle problems resulting from global economic turmoil and it can overcome external problems. There is no need panic," said Turkish Finance Minister Kemal Unakitan in a press conference in Ankara on Wednesday.

Turkish markets were hit hard by global turbulence in the last few days as Turkey has one of the largest current account deficits in emerging markets, but Finance Minister said there was no need to panic and the government would take any necessary measures, although he refrained from giving details. "There have been these global fluctuations in the past and there will be more in the future. It is impossible for us not to get affected by these. But there is no need for panic. In the global volatility, we will not have problems caused by the current account deficit," he said.

Turkish stocks have lost almost 20 percent this month amid a global sell-off prompted by fears of recession and credit losses. The lira, backed by high interest rates, has lost 3 percent this month.

Noting that Turkey displayed a better performance than many countries in the aspect of macro economic developments in recent years, Unakitan said that inflation rates dropped, budget deficit decreased and interest rates were reduced during this process.

Unakitan said that Turkey's integration to world economy speeded up after 2003, adding that despite the fluctuations in 2006, financial balances were established in 2007. He listed the priorities of 2008 as to press ahead with privatizations in the first half of the year, fight against unregistered economy, increase diversity of tools in financial sector and decrease burdens on employment.

"Foreign investment will continue to come to Turkey because of the stability," Unakitan said.

"We plan to complete an initial public offering of a 15 percent stake in fixed-line operator Turk Telekom in May, and in the same month we aim to launch the tender process for several highways and bridges. We would also begin work on the privatization of lottery that month," he said. Unakitan explained that electricity sector privatizations, including power plants, would begin in 2008, while the strategy for the privatization of Halkbank would be announced soon.

"We will receive last offers regarding the privatization of TEKEL cigarettes on February 18th," Unakitan revealed. "We are currently working on a strategy for the privatization of sugar factories. The privatization of Bandirma and Samsun sea ports will take place in 2008."

Unakitan told that privatizations in Turkey between 2003-2007 pumped into the market over 40 billion USD.

Unakitan also said the IMF-backed sell-off programme would continue in the first half.

Noting that structural reforms were adopted, economy gained strength and became stable in Turkey, Unakitan said that Turkey's economy has the power to overcome external problems.

Unakitan said that the share of the United States in Turkey's export was six percent in 2006, and seven percent in 2007, adding that Turkey's trade with EU countries is more than this figure.

He also said that there are things Turkey has to accomplish, citing them as preserving fiscal discipline, continuing structural reforms, making economy sound, reducing inflation and debt rates, finding a solution to current account deficit and decreasing debt fragility.

Following Prime Minister Tayyip Erdogan's announcement on Tuesday that the budget deficit swelled to 13.9 billion lira last year from 3.9 billion a year before, Unakitan said in December alone the budget posted a 4.2 billion lira deficit.

Assessing macro economic developments and 2007 budget implementation, Unakitan said that Turkey's central management budget expenses amounted to 203.5 billion YTL and incomes totalled 189.6 billion YTL in 2007.

"The target on budget deficit for 2007 was earlier set as 16.8 billion YTL, but the figure realized as 13.9 billion YTL. Therefore, budget deficit was lower than the targeted figure and it shows that finance ministry performed well," he explained.

Upon questions on the move of Central Bank, Unakitan said "We will certainly move CB to Istanbul. Banking Regulation & Supervision Agency (BDDK) and Capital Market Board of Turkey (SPK) will also be moved. Istanbul is the financial center."

The New Anatolian