Şimşek: Turkey-IMF program should aim at increasing competitive power

Şimşek: Turkey-IMF program should aim at increasing competitive power

Economy Minister Mehmet Şimşek said Turkey managed well to pass through hard times of the turbulent world economy.

September 13, 2008, Saturday/ 18:07:00
Economy Minister Mehmet Şimşek has said that Turkey and the International Monetary Fund (IMF) should agree on an economic program aimed at increasing Turkey’s competitive power.
Speaking to the state-run television station TRT-1, Şimşek said Turkey and the IMF were continuing their technical dialogue and that post-program monitoring and a precautionary stand-by arrangement were the options that were currently on the table. “If we cannot make a program aimed at increasing our competitive power, we can go on with post-program monitoring,” he explained.

He said Turkey should continue down its current path of reducing inflation to single-digits and ensuring price stability without making concessions. “What we should do is keep the fiscal policy firm, rehabilitate competitive power with micro-reforms, lift the obstacles facing competition and enter a process that will ensure a permanent drop in inflation,” he said.

He noted that the world was going through a problematic time and that Turkey has also been affected. He said Turkey’s growth rate slowed in the second quarter of 2008, adding that the 1.9 percent growth figure in this period was the lowest since 2002. He pointed out that Turkey had grown 4 percent in the first half of the year, saying he regarded this as reasonable. He also said Turkey’s growth figures had been affected by internal and external developments and that it was not surprising that growth started slowing down as of the second quarter of the year.

Şimşek stressed that maintaining price stability and lowering inflation were of the utmost importance, noting that Turkey should not abandon these goals. Acknowledging that the recent inflation rates had come in high and that this had sparked many discussions, Şimşek said it was important to hang on to the current strict fiscal policy, which he claimed would be effective enough to solve many of the problems facing the Turkish economy. He recalled that minimal reforms he had mentioned were intended to ease cutthroat competition in Turkey, adding that they also were trying to avoid further hikes in inflation, in accordance with their fiscal policy.

Also mentioning the recent increase in value of the lira, Şimşek noted that the Turkish currency has increased in value thanks to the rising productivity and economic growth the country has seen in recent years. “However, this year’s growth rate is relatively low, and the primary deficit is higher in Turkey compared to recent years. In such an atmosphere we do not want the Turkish lira to gain more value,” Şimşek said.

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