Before the MTP announcement today, I had the opportunity to talk to a number of reps of almost all sectors, from finance to real sector. As far as I can see a lot of people are taking a positive approach to the issue. Let me tell you why:
Bankers, business people and professionals give the best effort they got if they have even the slightest hope for things will get better. After all, isn’t it the real reason why we’re here on this earth, to work, show some effort to create something of value? Although the real sector is complaining about high levels of exchange rates and interest rates, they are doing their best to find a way to reconcile with banks. Banks too are aware of the fact that it is not possible to carry out operation with current levels of exchange and interest rates.
I totally agree with those who say, “All we need is a couple of good manoeuvres to improve the perception of Turkey”. But, some things will need to get done until the perception is fixed. Government should provide urgent solutions given the problematic situation of real sector. The only thing we were provided with until now was nothing but precautionary measures. In order to come up with real solutions, Administration will have to take more comprehensive and convincing actions. Turkey must make exports its number one priority especially considering America’s efforts to reshape the World Trade.
“We need a broader definition of foreign currency earning activities…”
Turkish Private Sector has a significant amount of foreign debt stock. With sharp rises in exchange rates, loan performance has become something between 15 to 20 years, which should be 6 to 7 years under normal circumstances. The fact that technical bankruptcy risk was covered up several amendments to the Turkish Commercial Code may result in other complications.
Mr. Can Fuat Gürlesel, advisor to the Turkish Exporters’ Assembly, underlines that EXIMBANK should update its limits so that exporting companies can continue to show a positive performance, also the Central Bank should provide “pre-shipment export credits” backed up by rediscount credits. He also insists that the CGF should be used to enhance the caution money structure of exporters. I must say that I’m in violent agreement with him there.
Other than that, the definition of the “foreign currency earning activities” must be expanded. Measures to encourage foreign currency making activities must be taken, rather than actions to prevent use of foreign currencies in business transactions. Also, providing urgent solutions to exporters’ problems should be embraced as high priority task.
So, I hope the MTP, which is scheduled to be launched today, will not include only rule-based fiscal policies to enhance growth, but also policies to promote spending responsibilities. I really think that an economic growth model suggestion based mainly on exports would help the Government make a very good impression on everyone.