Yesterday, news agencies asked me plenty of questions about the economy. I realized that there are people still believing that the economic packages is the only remedy to bring USD/TRY, interest rates, inflation and current account deficit under control.
Everyone is waiting for an announcement on the new cabinet. I can guess that AK Party’s MYK (Central Executive Committee) and MKYK (Central Decision and Executive Committee) meetings on Friday will help clarify some questions. “What’s the next step?” Everyone wants to know the answer to this question. Here’s my 4-step remedy to slowly eliminate the problem:
- State of Emergency must be lifted immediately: Foreign investors do not seem very happy about the fact that important legislative powers are not belonging exclusively to the Parliament. They also seem quite unhappy about the communiques and regulations issued by the Ministries that violate international treaties and conventions. “Rule of Law” is a crucial criterion a true sustainability of the regime. Although they can understand Government’s need to act more flexible in order to be able to fight against terrorism, they believe that it is absolutely wrong to issue decree-laws stipulating permanent changes.
- Economy Administration should be able to act independently: The fact that the Government gets constantly involved in market economy, which is in fact the role of financial institutions that regulate Monetary and Capital Markets and Goods and Services Market, is disruptive to the perception of Turkey in the world. Government should adopt a more moderate attitude and bring its statements to acceptable standards.
- Stability in Foreign Policy: Moving further away from EU to establish closer ties with Russia, China and Iran, and coming into conflict with the US damaged the markets. Turkey should entirely revise its foreign policy in order to maintain more balanced relationship with the countries in the region as well as in the world. This is the only way to attract a stable foreign capital flow into Turkey.
- New anchors for the economy: Government collects large amounts of taxes so as to prove that the Budgetary Discipline is strongly maintained at all costs. According to OECD statistics, the ratio of taxes collected in Turkey to its national income per capita is higher than the U.S. That’s because the Government doesn’t let the tax burden to spread around. This is a problem that needs to be addressed immediately and rationally.
The above-cited steps, with a few others, are the remedy to improve the current economic situation in Turkey, rather than launching economic packages one after another. However, I surely don’t keep my expectations high as the local elections are ahead.