Turkish government working on two-step economic reform package

Neşe Karanfil Hürriyet/ANKARA

Deputy Premier Ali Babacan has been coordinating the government’s package to help the development of a regulated market economy. AA photo

The Turkish government is said to be working on a two-step economic reform package to help the development of an establishment-regulated market economy and introduce further incentives to private sector investments.

This economic package appears to be part of the “alternative plans” mentioned by Prime Minister Recep Tayyip Erdoğan following the Central Bank’s recent rate hike announcement, which Justice and Development (AKP) officials say Deputy Prime Minister Ali Babacan has been working on for some time.

Speaking to a group of reporters on Jan. 29, the prime minister had said that if the Central Bank’s recent rate hike fails to maintain its recovery, the government may announce work on “a Plan B or a Plan C” in the coming days or weeks.

According to AKP sources speaking to daily Hürriyet, work on the two-phase reform plan had started before the interest hike, but the move that will likely hurt growth figures has increased its urgency.

As part of the first phase of the reform, which will be included in a new “democracy package,” the government will introduce a number of regulations created in accordance with regulated market economy principles.

The package will reportedly cover enhancing internal audits and measures to prevent illegality.
The sources claimed that the government aimed to record all kind of money movements, with donations and aids coming first, in a bid to combat corruption and financial crimes.

The definition of financial crimes is also expected to be revised and extended in the package, which also foresees the foundation of a special board to judge financial crimes.

The second part of the reform plans consists of new incentives for the private sector that would seek to ease the pressure on them that escalated with the rate hike and the currency volatilities.