Government’s 2010 economic program envisages end to crisis

According to the program, the consumer price index (CPI) will be 5.3 percent, while gross domestic product (GDP) will grow by 3.5 percent to reach TL 1.03 trillion as of the end of 2010. GDP will be $643.1 billion in dollar terms. Exports will grow to $107.5 billion, and imports will be around $153 billion.

Estimating that the population will reach 72.7 million by the end of next year, the program foresees a GDP per capita of $13,647.

The program estimates that the employment participation rate will be 47.4 percent, whereas the unemployment rate will edge down to 14.6 percent.

The public sector borrowing requirement (PSBR) is foreseen to be 4.2 percent of GDP. It is estimated that the primary surplus, on the other hand, will stay in the red, at -0.3 percent over GDP.

The program defined its basic macroeconomic target as “removing the adversities of the global economic crisis on the domestic economy, putting the economy back on the growth track, increasing employment, keeping the rate of inflation in single digits in compliance with medium-term targets and taking steps to correct the derailed public account balances.”

A pledge was made in the economic program to complete the legal infrastructure for a new and more effective “fiscal principle.” Public fiscal management will be conducted in accordance with this new principle no later than the 2011 budget period.

Within the scope of this new principle, public expenditures will be revised in accordance with the redefined priorities, and consequently the public spending programs which are no longer productive or are no longer a priority will be eliminated from public investment projections.

It said monetary and fiscal policy will be redefined to support growth and stability in a way that does not conflict with the Central Bank of Turkey’s price stability policies.

As a means to clear the effects of the global financial crisis in the real sectors, the government will speed up its incentives to support private sector investment, while adopting parallel policies to boost exports and employment.

As for public investment, the government retained its commitment to offer privileges for projects that are under way in the relatively poorer and less developed regions of Anatolia, such as the Southeastern Anatolian Project (GAP) and Eastern Anatolia Project (DAP). The government also promises to keep allocations of funds available to complete the Konya Basin Project (KOP). The investments required to achieve the policies for membership in the European Union will also continue without interruption.

Regarding revenues, the program envisages the introduction of simpler tax regulations aiming to achieve stability in revenues. Lump-sum taxes and duty will be updated pursuant to overall economic conditions. Investigations into tax evasion and tax dodging will increase countrywide. In addition, several steps will be taken to boost the revenues of local administrations.

The legal infrastructure of the Court of Accounts will be strengthened while endowing it with more powers to hire better qualified staff in an attempt to increase the efficiency of external auditing of state operations.

The economic program also promised to continue taking measures to increase the productivity of the State Economic Enterprises (KİT) by redefining their business policies in accordance with the targets set out in decrees on investment and financing. Studies on the privatization of KİTs will continue, with a focus on productivity and efficiency, the program asserted.

Although the harsh conditions of the global economic crisis will ease to a large extent, the program said, some remnants of its negative effects will persist in 2010. For instance, the current account deficit will still pose a problem next year as the contraction in global demand is likely to continue.