- Posted October 6, 2013 by
Warning from IMF to Turkish Economy Administration
International Monetary Fund has given a warning to Turkish Economy Administration and Central Bank: “lower the vulnerabilities tighten the monetary and finance policies’’
IMF committee has recently completed their 4’th content meetings in Turkey & warned the economy administration about country’s financial situation: “Structural reforms must be done about the midterm growth rate targets of country’’
Some of the policies such as low unemployment rate praised but central bank policies criticized in same commentary report.
''Important parts of the report are like:
Growth rate is 3.8 per cent
In 2012 Turkey has successfully lowered the income injustice rate. Positive growth rate kept rising. But in 2013 it came from domestic requisitions. Imbalances are still on high levels. Global financial situation should be taken into consideration; vulnerabilities have to be pulled down to the lowest levels. Mid and short term policies need to be focused on these targets.
Growth rate behind the leadership of the domestic demand creates upside risk on current accounts deficit and inflation rate. That’s why growth rate would be stuck around 3,8 per cent. Gold import rate has risen. It has a big effect on economy. After all those data GDP per capita will be over 7 per cent. Inflation is going to be over the targeted level.
Basic vulnerability point:
Another basic difficulty for Turkish Economy is reduced foreign based capital flow. Economic policies need to be lower those risks.
Financial policies should be tightened by trimming the sails. When the global portfolio flows re-balanced the possible run of foreign based capital flow country could be kept under control.
A realistic interest rate policy is essential:
Additional tightening policy must be compatible with inflation target. High and rising current accounts deficit requires positive and realistic policies. At first stake interest rates of weekly repurchase agreements.
To the attention of Turkish Central Bank :
Central Bank need to re-examine their monetary policy. Current outline complicated & multi targeted. Monetary policy is being questioned by markets since external environment get more difficult. Communication between monetary policy and markets is way more difficult than ever.
Sales from foreign exchange reserves need to be made only to stop the high undulations. Limited net exchange reserves must be protected. After the capital inflows net reserves must be increased.
Foreign exchange gap of Turkish companies
Banks don’t look so problematic on their foreign exchange reserves. But especially companies that make their business activities and loans w/foreign exchange based credits need to be watched more carefully. Their foreign based liquidity and law solvency can be problematic. The loans given to them based on foreign exchanges must be regarded more. It’s quite critical to watch the amount of foreign exchange reserves and the banking sector’s general structure for those loans given to all sizes of companies.
Targets of 2013 public finances are possible to catch. But current finance policy is based on expansion and needs to be controlled. In the beginning of fiscal year revenues supported the performance. Out of that high public revenues induce rise on nominal payments. Instead of spending them unexpected public revenues need to be saved.’’
It’s very clear in their commentary. IMF wants Turkish Economy Administration to save the money they taxed from workers and investors.
Instead of spending money to the wars with neighboring countries & killing innocent children with poisonous gas cans, country should save money for the future of their people.
Single currency is a very dangerous move for world economy. While countries like Turkey are saving their incomes mostly based on labors and taxation using only one or two foreign exchanges makes economy quite fragile. If Turkish Economy wants to survive they need to see the whole picture. World economy is depend on no more US Dollars or European Euros. There are BRICS countries and their currency is getting more important. That happens faster than economy gurus forecasted.
The economy that we know is already based on lies and fraudulence.
IMF or other economy administrations on the stage are the failure of the liberal and/or consuming based economy has taught us to resist against current economic system.
As the people of the world we need to move together obviously. Aren’t we?