Comparing the tax reductions to medicine, the minister said such treatment could have some side effects on the economy if implemented for a long time. “After some time the markets could become addicted to tax reductions, and this is not good for the future of the economy. There are times that we can introduce such incentives, and sometimes we cannot. We do not want to create high expectations in the market,” the minister stated. Ergün said the government expected to take steps after having assessed the effects of the tax cuts on the market. “Making an announcement on tax incentives will lead to speculation in the market.”
Mentioning the economy's current state amidst the ongoing global financial crisis, he stated that there are signs showing that the crisis has bottomed out and that people should maintain hope. “The latest indices indicate that a slight recovery has occurred in the country's capacity utilization and industrial production.” He said people should avoid pessimistic declarations concerning the market, stressing that the psychological side of the crisis should not be ignored.
Asked when the government will announce a middle-term economic program, Ergün said the studies on the issue were still under way and that the government expected to finalize the details of the program before the end of September. “We are contemplating some savings measures along with taking the necessary steps to maintain budgetary discipline in the markets.”
On the issue of a possible stand-by deal with the International Monetary Fund (IMF), the minister stated that the parties have not yet solved some problems still on the table for such an agreement. “We have close relations with the fund, and it is not a must to make stand-by deals to continue relations with the fund.”
