IMF partially right about Turkish economy, says minister

ANKARA/ISTANBUL

The International Monetary Fund (IMF) may be partially right in its comments on the Turkish economy and the Turkish government has already worked on these points as the government is open to all constructive critiques, Turkish Finance Minister Mehmet Şimşek said during a live TV interview on CNN Türk yesterday.

“We are taking all constructive critiques into consideration, and the IMF is partially right in its comments on Turkey, although it is sometimes walking into the trap of making too much of a generalization,” Şimşek said.

The IMF called on Turkey to tighten its monetary and fiscal policies to reduce its external imbalances, which have been exacerbated by capital outflows from emerging markets.

“Turkey unfortunately has a structural current account deficit problem. We are quite aware of the fact Turkey cannot overcome the problem with short-term and daily policies so we have focused on developing many projects which will enable Turkey to be less dependent upon foreign energy sources, to make more R-D works and to attract more direct investment, among others,” he said.

Turkey has recently faced three considerable, but unexpected shocks, Şimşek noted.

“The Eurozone crisis, the political, social and economic turmoil in the Middle East and the ramifications of this chaotic environment on energy prices… All these developments have increased Turkey’s current account deficit and needs for capital,” he said.

The problem here about the IMF approach is the urgent call for response, said Şimşek, adding that some time was needed to resolve long-term problems.

“We’ll announce the budget draft soon. You’ll see critically important initiatives to decrease current spending,” he said, adding the new medium-term economic program would also be announced very soon.

Şimşek also noted the Turkish government would not walk into the trap of populism in adopting its financial and fiscal policies just before a long election cycle.