Turkish Business Club
Posts 1-1 of 1
-
Dr. Nilgün Birgören Premium Member Group moderatorThe company name is only visible to registered members.European Union more crucial anchor for the economy than IMF
Foreign Minister Ali Babacan spoke during a session at the World Economic Forum, which closed on Saturday.
Turkiye's European Union membership process is a stronger source of investor confidence than time-bound deals with the International Monetary Fund (IMF), Foreign Minister Ali Babacan has said, playing down concerns that his government's reluctance to sign a standby agreement with the global lender soon would exacerbate the impacts of a global crisis on the Turkish economy.
Speaking to a group of reporters in a private meeting on the sidelines of the World Economic Forum (WEF), Babacan said Turkiye being firmly planted in the EU membership process was much more important in building investor confidence. Downplaying the effects on monetary policy that an IMF standby agreement holds for the markets, he noted that in 2003-04, the IMF played an important role in bringing about structural reforms, which ultimately brought Turkiye more in line with the EU acquis.
Turkiye's previous $10 billion IMF standby deal -- which stipulated conditions related to loans -- expired in May. A precautionary standby deal would enable Ankara to gain access to IMF credit if needed. But Prime Minister Recep Tayyip Erdoğan said recently that the government would not necessarily sign a new loan accord if the global lender exerted excessive constraints on budget spending, tax rates, economic growth and investments. Business leaders have called on the government to secure another loan deal to help limit the fallout from the global financial crisis.
Babacan said the beginning of accession negotiations with the EU in October 2005 did much more than any IMF standby agreement in luring investors, and noted that IMF deals were designed more to create short-term confidence, as Turkiye's standby agreements last only three years. As proof, he pointed to the jump in foreign direct investment (FDI) in 2005 that grew almost tenfold over the previous year. "The EU is a long-term anchor," he said. "It gives us important direction. … The business community, international markets are aware of this. If the world is going through difficult times. This should give us more initiatives to stick to the EU program."
Babacan, who was the economy minister in the previous government, recounted that he has so far signed 10 letters of intent with the IMF, the first 150 pages long and the latest one only eight pages in length. The difference, he said, stemmed from the fact that IMF demands were already met in the course of these years as part of the EU reform process.
Turkiye began accession negotiations with the EU in 2005, but progress has been slow over the past three years. The EU Commission is set to urge the government to refocus on the reform process with fresh energy, in a progress report due to be released this week.
Babacan maintained Turkiye's commitment to political and economic reform despite the EU freezing a number of key negotiating chapters over disputes on Cyprus and said he was confident that the reform process would remain on-track.
Addressing concerns over the lack of progress with respect to the EU reform process, the minister said the slowdown stemmed from what he called the "noisy periods" of 2007-08, referring to high political tensions at home over election of the president election and secularism. The crisis peaked when the military issued a strong statement warning of intervention in April 2007, followed by early elections. The crisis resurfaced when a state prosecutor appealed to the Constitutional Court seeking closure of the ruling Justice and Development Party (AK Party) on charges of anti-secular activities in March. The court eventually ruled not to close down the AK Party.
Babacan said that despite the turmoil, 31 laws (29 of which were directly tied to the EU reform process) have been made during this turbulent time. The minister also noted that confidence in the Turkish economy had remained intact, enabling the attraction of record levels of FDI.
Babacan also dismissed concerns that the government could turn to populist policies to lure voters in the next year's local elections, saying the polls were more about the individual merits of candidates than government spending. "I think my prime minister has proven many times that even in the most sensitive of times, he goes ahead and takes the most courageous steps forward. For six years he has proven this," Babacan said.
Foreign Minister Ali Babacan departed yesterday for a tour to four European Union member countries, with Marseille being his first stop, where he participated in a ministerial meeting on the Barcelona Process: Union for the Mediterranean.
Foreign ministers from all 43 states of the Euro-Mediterranean partnership met in Marseille yesterday and today to endorse plans for the mandate, structure and institutional governance of the Barcelona Process. The initiative aims to inject a renewed political momentum into the EU's relations with the Mediterranean through the reinforcement of shared ownership and the achievement of wider visibility through a far-reaching program of projects.
Today Babacan travelled to Rome, where he is attending the 5.Turkish-Italian Business Forum and have bilateral meetings. I am partecipating the forum. Later this evening we will have a gala dinner on Lungo Tevere, tomorrow we will attend the forum and the workshops. I will get back to you with more news on the 5th edition of the forum.
Babacan will later travel to Prague for bilateral meetings with Czech officials tomorrow. The minister's last stop will be London, where he will arrive on Thursday evening. There, he will have talks with British Foreign Secretary David Miliband.
Nilgun Birgoren
- 04 Nov 2008, 7:15 pm
