17 April 2014, Thursday
Today's Zaman

‘IMF agreement can ease budget deficit, protect employment’

23 January 2010, Saturday /ZAFER ÖZCAN
Turkey needs to sign an agreement with the International Monetary Fund (IMF) in order to attract investment and decrease unemployment, though part of it should be used to cover the country’s enormous budget deficit and also push the central bank to cut interest rates further, Turkish Confederation of Businessmen and Industrialists (TUSKON) President Rızanur Meral has said.

Speaking to reporters on Wednesday after the Turkey-Egypt Trade and Investment Bridge program in Cairo organized by TUSKON, Meral called for the signing of a new stand-by deal between Turkey and the fund. Meral noted that the right conditions for such an agreement are crucial to its effectiveness and said; “At this point, the conditions will open doors for investment and production in Turkey, and will protect employment. With these conditions the agreement will be in Turkey’s favor.”

The contraction in the Turkish economy last year led to a severe decline in tax revenue and to a TL 52 billion budget deficit. In order to finance this deficit, the Treasury borrowed from banks in the private sector and thus restricted the amount of credit available for the real sector. Meral said this situation had led to a severe credit crunch in Turkey. “If there is a new deal with the IMF, the funding can be used to close some of the deficit.

Banks can therefore lend to the real sector, giving some breathing space to both business owners and industrialists,” he said.

Speaking on the record-breaking interest rate cutting spree by the Turkish Central Bank, Meral said if an IMF agreement is reached, then the current interest rate of 6.5 percent is not adequate and needs to be pulled down further to 4 percent. He stressed that in order for the new IMF stand-by deal to be effective, the central bank needs to continue to cut policy rates. “The central bank needs to support this agreement by continuing to drop rates. It should put aside fears of inflation by targeting a high 10 percent inflation rate.”

Meral also criticized Turkish banks, saying they were unable to mirror the success of the real sector in expanding abroad. In order for Turkey to be a global economic player, banks as much as firms need to pursue opportunities abroad, said Meral. He added that public banks, which are currently performing well, should lead the way in the banking sector by setting foot outside Turkey.

BUSINESS  Other Titles
Twitter: No current deal to open office in Turkey
Ankara says Russia's South Stream pipeline could run to Turkey
Turkish central bank meeting eyed for signs of political meddling
Turkish cement firms eye assets after Holcim-Lafarge merger
CHP raises issue of irregularity in loans for Sabah-ATV sale
TUSKON key in trade with Turkey, top Russian group says
Number of job seekers hits 10-year high
Gül attends event of group labeled ‘traitors' by Erdoğan
'Banning social media disaster for any government's global image'
Pakistan publishes list to embarrass tax cheats into paying up
Turkish schools help to enhance trade relations with Africa
Unemployment rate sees decrease year-on-year in Jan
Pegasus Airlines to start flights to Bahrain
Installment payments down 16 pct since credit card regulation implemented
Euro zone's trade surplus widens on rising exports in February
Doğan Holding merges with publishing group
Turkey's Koç: We will concentrate our energy on investments
EU lawmakers complete financial system overhaul
Egypt limits air conditioning in mosques as power shortages worsen
TL 1.5 billion budget deficit seen in Q1