Fifteen percent jobless rate

Although analysts say the reason for these declarations were the consequences of the negotiations held with the IMF the numbers the government released are a much more realistic reflection of current economic conditions. We know that the middle term economic plan, which will be revealed in May, will encompass the periods 2009 and 2012.

It is clear that these fiscal measures will ensure fiscal sustainability and strengthen the control on collection of taxes for the coming three-year period. It is also clear that new negotiations are going to be held with the IMF especially on fiscal issues. According to the three ministers’ declarations the economic growth projeçtion for 2009 has been revised from 4 per cent to -3.6 per cent. Although markets regard this forecast as -4.4 per cent it is important that the Turkish government finally admitted the economic reality and has narrowed the differences of opinion with the IMF.

Economic growth projections for the 2010-2011 period were more realistically predicted as 3.3 per cent and 4.5 per cent, respectively. The respective current accounts deficit predictions for 2010 and 2011 were announced as 11 billion dollars. These numbers should be expected between 18-20 billion dollars. Also the budget deficit is expected to reach 5 per cent of the GDP in 2009. But to reach these targets the government has to find an extra 10-15 billion Turkish liras resource.

The debt ratio is expected to remain stable in 2010 and 2011 at 44 per cent and 43.3 per cent. The primary surplus will be increased to around 2-2.5 per cent and it may be possible that the overall budget deficit will be brought down to 3.7 and 3.5 per cent respectively.

A new bill regulating fiscal rules will be introduced to Parliament this year. The bill will enable fiscal adjustment going forward under the new IMF program. The fiscal rule will help anchor market expectations as Turkey moves to lower primary surpluses compared to former years. It is clear that the government is revising its old economic policies. Another example to this is that the expenditure limits of municipalities will be revised and brought down.

The tax auditing capability of the Revenues Administration will be strengthened. This is expected to wipe out differences with the IMF. It is understood that this is related to the modified set of proposals coming from the IMF. Big sums of taxes and surcharges are expected to meet the fiscal targets. These funds may cover charges on a wide range of services.

Either the IMF of the EU, does Turkey really need an anchor? Turkey has to ster her derailed economy on the right path. Prior to local elections nothing has been done except introducing certain face lifting measures to the Grand National Assembly. Especially after the g-20 meeting Turkey has become more interested with the IMF which got hold of a 1.1 trillion dollar fund.

We have to keep in mind that developed countries will have more claim on the 80 per cent lump of existing world funds while these funds will drop by 80 per cent compared to 2007 and Turkey will be much more in need of IMF funds. Now the question is where will Turkey spend the funds expected from the IMF.

If Turkey as before will not pay attention to make the necessary infra structural reforms, will not readjust its financial structure and string back an atmosphere of security she will not be able to reactivate production and consumption. Additionally if Turkey will not be able to receive the necessary amount of funds she needs she will have great difficulties in the coming three years. Even today with the 15 per cent jobless rate we are having big difficulties.