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International Information Centre for Balkan Studies



Albayrak says Turkey will come out of volatility stronger, ruling out IMF plan

Turkey's Treasury and Finance Minister Berat Albayrak promised on Aug. 16 the country will emerge "stronger" from the currency crisis sparked by a diplomatic spat with the United States, and ruled out an IMF bailout.

"Turkey will emerge stronger from these (currency) fluctuations," Albayrak was quoted by the state-run TRT television as saying in a conference call with thousands of foreign investors.

"There is no IMF plan, we have focused on attracting direct investments," he also said.

In the conference call, Albayrak said Turkey was now dealing with the market anomaly and has a banking sector which is healthy and strong.

'No compromise from fiscal discipline, fight against inflation'

Ankara will not compromise on fiscal discipline and reducing inflation is a top priority, Albayrak said, adding that Turkey was not a highly leveraged country and debt stood at 137% of GDP in the first quarter of 2018.

All ministries have a mandate for ambitious savings, he noted, and investment portfolios will be reviewed.

'Capital controls will never be on agenda'

"Turkey has never implemented non-market measures and capital controls will never be on the agenda," Turkish Minister said.

Ankara will ensure further fiscal tightening, with a focus on boosting Turkey's primary surplus, according to Albayrak, as structural reforms and labour market flexibility are also a priority.

'More cooperation with Germany, China'

Albayrak also stated that Ankara expected a 6 billion lira ($1.04 billion) primary surplus for the end of this year.

"We will navigate through this period of U.S. sanctions with other parties, including Germany and China," he said, referring to Washington's sanctions targeting Turkey over the continued arrest of Pastor Andrew Brunson, which put a strain on the Turkish Lira.

'No fine expected in Halkbank case'

Turkey is not expecting any fines against state-owned Halkbank, Albayrak concluded, referring to the case of a former Halkbank executive who was convicted by a U.S. court in January of helping evade U.S. sanctions on Iran.

The lira, still down 34 percent against the dollar this year, firmed to 5.77 by 1100 GMT from a close of 5.95.

No indication of Turkey requesting assistance from IMF

 

There is no indication that Turkish authorities have been considering asking for financial assistance from the International Monetary Fund (IMF), a spokesperson said on Aug. 15.

“We have received no indication from the Turkish authorities that they are contemplating a request for financial assistance,” the IMF spokesperson, speaking on condition of anonymity, told Reuters.

The experts of the Washington-based organization have been monitoring the “market volatility” in Turkey “closely,” she added.

“In light of recent market volatility, the new administration will need to demonstrate a commitment to sound economic policies to promote macroeconomic stability and reduce imbalances, while ensuring full operational independence to the central bank to pursue its mandate of securing price stability,” she said.

The lira, which has lost nearly 40 percent against the dollar this year and hit levels over 7.0 in the last week, has gained some ground in early trade on Aug. 16, floating between 5.7 and 5.8 against the dollar.

On Aug. 15, Qatar pledged $15 billion in investment to Turkey, which will be channeled into banks and financial markets, a Turkish government source told Reuters.

The move by Turkey’s Gulf ally offered further support to a lira rally after the TurkishCentral Bank tightened liquidity and curbed selling of the currency.

Turkish President Recep Tayyip Erdoğan has said Turkey is the target of an economic war, and has made repeated calls for Turks to sell their dollars and euros to shore up the national currency.

Source: Anadolu agency/Reuters

 

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