Spending spree prior to IMF team’s arrival
Güncelleme Tarihi:
by Erdal Sağlam - Referans
Oluşturulma Tarihi: Aralık 23, 2008 00:00
ANKARA - With local elections in March drawing near, the government has boosted spending to win hearts and minds of the electorate, just before the arrival of an expected delegation from the International Monetary Fund, or IMF.
The Justice and Development Party, or AKP, government is said to be exerting pressure on the economy bureaucracy to this end. Although this year’s budget does not offer any opportunities, there is excessive
Municipal investments have increased, despite a lack of resources, and the same is said for agricultural products. To push through the spending, Prime Minister Recep Tayyip Erdoğan is said to have given directions to both public banks and the economy bureaucracy.
The AKP government authorized the Turkish Grain Board, or TMO, to purchase a weighty amount of hazelnuts, despite its healthy current stocks, over the last few years, thus excluding the Union of Hazelnut Sales Cooperatives, or Fiskobirlik. Now it is time to payback for the hazelnuts, and the government has started to force the payments without considering whether there are resources to so or not. But TMO is already heavily indebted due to agricultural product payments and is not capable of borrowing from external sources.
Loan for TMO
TMO is also unable to take on debt from commercial banks at home. Besides, it has no corn or hazelnut for collateral, which makes getting loans harder. The government has started to pressure the Treasury and public banks for the TMO to pay its debts to producers, prior to the elections, according to well-informed sources in Ankara.
Ziraat Bank, Turkey's biggest state lender, was forced to open a loan worth YTL 370 million to TMO prior to the Feast of the Sacrifice. Such a move means loosening fiscal discipline and abandoning the notion of transparency in public accounts. It is said that the loan was provided on Treasury guarantees. The Prime Minister is said to have called Treasury officials to give directions to find a formula for hazelnut payments.
The Treasury, on the other hand, does not have enough room in its budget to make allocations for such a payment. The Undersecretary of the Treasury is said to be close to resignation due to the distress, according to sources.
Meanwhile, Economy Minister Mehmet Şimşek is said to have started opposing such policies due to his concerns regarding how to explain the current developments to the IMF.
The Treasury and public banks are facing increasing pressure not only due to TMO, but also due to other state economic enterprises, or SEEs. The fact that the global crisis limits the opportunities to borrow from external sources also plays a role in the situation.
Municipal investments have increased, despite a lack of resources, and the same is said for agricultural products. To push through the spending, Prime Minister Recep Tayyip Erdoğan is said to have given directions to both public banks and the economy bureaucracy.
The AKP government authorized the Turkish Grain Board, or TMO, to purchase a weighty amount of hazelnuts, despite its healthy current stocks, over the last few years, thus excluding the Union of Hazelnut Sales Cooperatives, or Fiskobirlik. Now it is time to payback for the hazelnuts, and the government has started to force the payments without considering whether there are resources to so or not. But TMO is already heavily indebted due to agricultural product payments and is not capable of borrowing from external sources.
Loan for TMO
TMO is also unable to take on debt from commercial banks at home. Besides, it has no corn or hazelnut for collateral, which makes getting loans harder. The government has started to pressure the Treasury and public banks for the TMO to pay its debts to producers, prior to the elections, according to well-informed sources in Ankara.
Ziraat Bank, Turkey's biggest state lender, was forced to open a loan worth YTL 370 million to TMO prior to the Feast of the Sacrifice. Such a move means loosening fiscal discipline and abandoning the notion of transparency in public accounts. It is said that the loan was provided on Treasury guarantees. The Prime Minister is said to have called Treasury officials to give directions to find a formula for hazelnut payments.
The Treasury, on the other hand, does not have enough room in its budget to make allocations for such a payment. The Undersecretary of the Treasury is said to be close to resignation due to the distress, according to sources.
Meanwhile, Economy Minister Mehmet Şimşek is said to have started opposing such policies due to his concerns regarding how to explain the current developments to the IMF.
The Treasury and public banks are facing increasing pressure not only due to TMO, but also due to other state economic enterprises, or SEEs. The fact that the global crisis limits the opportunities to borrow from external sources also plays a role in the situation.