Time to look the IMF squarely in the eye
Güncelleme Tarihi:
Oluşturulma Tarihi: Aralık 15, 2008 00:00
Many of us at the Hürriyet Daily News & Economic Review believe in the power of positive thinking. Stand up straight. Speak in clear, declarative sentences. Focus on opportunities, not problems. But a nation cannot navigate a perilous economy by the adages of self-help books.
The economy will not grow because we visualize growth, nor will Turkey be stable because the government wills it so. It is time to sit down and cut a deal with the International Monetary Fund, or IMF. Yes, the government is right to look sceptically on any strictly monetarist prescription that the IMF is famous for writing that could tie its hands. But this is yesterday’s fear. "Fiscal stimulus" is the new mantra for economic policy makers everywhere. The IMF and the World Bank are no exception.
But since the world economy began its dive in September after the subprime mortgage crisis in the United States began to unravel the financial markets, Turkey has simply toyed with the IMF.
Let’s remember that the first "let’s make a new deal" discussions between the IMF and State Minister Mehmet Şimsek in last October. Prime Minister Recep Tayyip Erdoğan himself met with IMF officials in November. One IMF delegation has come and gone; another is expected to arrive this week. Rumors abound. Sometimes a stand-by deal of $20 billion is "near," other days the speculation will be $25 billion. Sometimes the term is 18 months, sometimes longer. Sometimes the reported quid pro quo is a curtailment of public works spending. Sometimes we read of IMF demands to bump the Value Added Tax beyond its current 18 percent. But this dickering between the Prime Minister’s intermediaries and IMF officials, who all leak selectively to the press, has to stop.
Stories of real sector layoffs, declining exports and shuttering retailers continue to make daily headlines. The government continues to insist the Turkish economy will grow by 4 percent next year. No serious economist anywhere believes this; neither do we. We will settle for the 1.9 percent forecast of the OECD. We have two primary concerns:
One, the continuing delay and the feckless horse-trading itself robs the investment community of confidence and contributes to the hammering of the New Turkish Lira. As of Friday, the value of the YTL was off 25 percent from the first of the year.
The second issue is the growing queue before the IMF. Iceland has been rescued, Hungary too. Pakistan just signed and Ukraine is about to. As the demands on the IMF grow, Turkey’s leverage declines. Contrary to the apparent hopes of the government, each passing day makes it only more likely that Turkey will be forced to accept onerous conditions.
It is time to stand up straight, speak in clear declarative sentences and look at the IMF as an opportunity, not a problem.
But since the world economy began its dive in September after the subprime mortgage crisis in the United States began to unravel the financial markets, Turkey has simply toyed with the IMF.
Let’s remember that the first "let’s make a new deal" discussions between the IMF and State Minister Mehmet Şimsek in last October. Prime Minister Recep Tayyip Erdoğan himself met with IMF officials in November. One IMF delegation has come and gone; another is expected to arrive this week. Rumors abound. Sometimes a stand-by deal of $20 billion is "near," other days the speculation will be $25 billion. Sometimes the term is 18 months, sometimes longer. Sometimes the reported quid pro quo is a curtailment of public works spending. Sometimes we read of IMF demands to bump the Value Added Tax beyond its current 18 percent. But this dickering between the Prime Minister’s intermediaries and IMF officials, who all leak selectively to the press, has to stop.
Stories of real sector layoffs, declining exports and shuttering retailers continue to make daily headlines. The government continues to insist the Turkish economy will grow by 4 percent next year. No serious economist anywhere believes this; neither do we. We will settle for the 1.9 percent forecast of the OECD. We have two primary concerns:
One, the continuing delay and the feckless horse-trading itself robs the investment community of confidence and contributes to the hammering of the New Turkish Lira. As of Friday, the value of the YTL was off 25 percent from the first of the year.
The second issue is the growing queue before the IMF. Iceland has been rescued, Hungary too. Pakistan just signed and Ukraine is about to. As the demands on the IMF grow, Turkey’s leverage declines. Contrary to the apparent hopes of the government, each passing day makes it only more likely that Turkey will be forced to accept onerous conditions.
It is time to stand up straight, speak in clear declarative sentences and look at the IMF as an opportunity, not a problem.