Rather than the IMF report itself, everyone seems to be more interested in the IMF delegation’s visit to certain political organizations during their time in Turkey as part of Article 4. However, this is not only cause of the ongoing discussions in Turkey about the Fund.
Responding to rumours that the IMF delegation visited certain parties, the Treasury found it necessary to issue an official statement: “IMF paying such visits… We find it rather odd.”
To be honest, it’s not normal at all for the IMF delegation to carry out such visits of political nature, because if the IMF needs intelligence on Turkish Economy, there are many other national or international agencies capable of collecting information in a quiet and retiring manner on Turkish Economy rather than the IMF itself. Despite this fact, I find it rather strange that it is an IMF delegation that is doing the fieldwork. It has also come to my notice that some international news organizations have been spreading negative comments about the BRSA’s statement last week. I just hope we won’t have to deal with wrong or misinterpreted perceptions.
However, we have to admit that Turkey draws too much attention to itself as so many and frequent changes take place in the country. I mean, ironically, we are paving the way for others to pry into our affairs and then we ask ourselves and the others, “What is going on here?”
“Be calm, be patient please…”
For example, Turkish Central changed once again the interest rates placed on TRY-denominated required reserves during the IMF debates. Although I endorse such decisions to ensure flexibility and fluency, I must admit that changing decisions so rapidly confuses the markets. So, I would like to offer Turkish regulatory authorities some hints to prevent confusion.
– You need to wait for a reasonable amount of time before you get to see the results of any endeavour.
– If the rules governing a particular matter are constantly changing, this means that you fail to conduct a proper analysis of the matter.
I admit the fact that the CBRT uses not only its financial instruments but also the deposits flexibly does bring certain benefits. However, making amendments to regulations 7 or 8 times in a row, like the Ministry of Treasury and Finance did with the Decision No. 32, raises concerns. So, we can assume that there was no consensus between the Ministry and the Banks when making the initial decision about the required reserves, or things didn’t go as planned partly due to the fact the Ministry offered asymmetric incentives.
In the meantime, IMF raised the maximum coverage for deposit insurance to 150000 Turkish Liras, which was a necessary thing to do maybe but the timing was wrong again. This decision raised concerns as well, especially considering the ongoing debates about Turkish banks lately. The bottom line is that international institutions will never stop paying regular visits to Turkey unless we stop making meaningless and ever-changing decisions without valid reason.
Obviously, it would a great virtue to take new step or fix our past mistakes. But, this “squeeze-tighten” thing may cause damages to some mechanisms (especially bank balance sheets) incapable of tolerating quick manoeuvres. Imagine a bank constantly modifies the deposit and interest rates of its reserves. After a while, the bank would inevitably lose the customer’s confidence. So, I think I would not be wrong is saying that the CBRT should be very careful every step of the way since it has rather different functions than any other bank.
Likewise, we should also avoid thinking that the Banks Association of Turkey is in violent disagreement with the BRSA so outside organizations are doing what’s necessary to ease the situation.