Time to make tough decisions: Turkish deputy minister

MOSCOW - Anatolia News Agency

Financial Affairs, Ali Babacan (L) speaks with British Chancellor of the Exchequer George Osborne (R) after G20 states finance ministers and central bank governors meeting where he has shared remarks on global economy. AFP photo

The time has come for decision-makers to take advantage of the calmer economic atmosphere and make necessary but tough decisions, Turkish Deputy Prime Minister Ali Babacan said Feb. 16 in a G-20 meeting in Moscow.

Babacan said the U.S. Federal Reserve Bank and the European Central Bank had convinced markets that they would not permit their states to become bankrupt. “They tried to consolidate their banks, but they need to put the structural reforms into action,” said Babacan at a ministers’ meeting in the Russian capital, while warning countries not to be misled by the relatively calm atmosphere. 

“If basic problems do not get solved, the markets may begin having concerns, and this may happen very quickly,” he said, adding that the present tranquility was something to take advantage of in terms of acting immediately. 

“The medium-term policies that will be carried out by states will give more positive results than uncertainty,” he said, adding that most developed countries were experiencing political uncertainty that damaged confidence in the present. 

He also said consumers avoided making expenditures while companies avoided making investments when they had doubts about the future.

Solution is common stance

Babacan said states should focus on growth that is promoted by the private sector’s expenses and investments instead of public expenditures, adding that the a common stance on economy policies would engender an atmosphere of confidence. “Let us hold our debates behind closed doors but let us also display common stance when we announce which policies we’re going to implement.” 

While the G-20 finance ministers and central bank governors can promise not to directly devalue their currencies, there can be no guarantees while central banks are pumping money into economies to re-stimulate growth. Babacan said the eurozone, the current center of the economic crisis, had taken crucial steps to achieve a financial union and unity in the banking system thanks to the European Central Bank’s courageous decisions over monetary policies. 

However, he said the predictability about when the monetary policies would normalize was of paramount importance; noting that the solutions of central banks would otherwise be unsustainable, causing concern to overcome markets.