Hurriyet Daily News with wires
Oluşturulma Tarihi: Şubat 07, 2009 00:00
ISTANBUL - While many see a regular stand-by accord with the International Monetary Fund, or IMF, there are some dissenting voices.
As business circles continue to pressure the government to make a deal with the International Monetary Fund, or IMF, a voice of dissent has come from Joseph E. Stiglitz, the Nobel-laureate economist. In another development, credit ratings agency Fitch said it would not change Turkey’s sovereign rating, even if no IMF deal was made.
"Classical standby agreements of the IMF are not enough to take the global economy out of this crisis," Stiglitz told the Anatolia news agency. "Such deals do not increase credibility, as some claim. The unregulated and unrestrained (architecture) that is one of the reasons for the current crisis resulted from IMF advice to various countries through standby agreements. Also, when one breaks the standby deal, one loses much more credibility compared to the pre-deal period."
Turkey a different beast
Countries that agreed on IMFdeals, such as the Ukraine and Hungary, "had no other choice," Stiglitz said, adding that Turkey’s conditions were different.
"In many countries public debt stock is rising, but Turkey’s shape is good in this sense," he said. "If there is no reconcilement in a deal suitable to current conditions, a no-deal might be a better choice." The IMF has a governance problem, the economist said, adding the fund could not predict the current crisis and did not know how to dig out of it.
"Turkey is seeing the benefits of the arrangements it undertook (in the aftermath of the 2001 crisis) in banking," he said. "Thanks to such precautions and the institutions it set up, Turkey is less fragile in this environment of global crisis."
Turkish banks and companies have used less foreign financing compared to their peers, the Columbia University professor noted. "Also, as mortgage financing is not widespread, the finance sector is not negatively affected."
Still, the slowdown in Western Europe, a key market for Turkey, will affect the country negatively, he noted. "Nevertheless, Turkey will be one of the least affected in emerging Europe," he said.
Winner of the 2001 Nobel Economy Prize, Stiglitz is the former chief economist of the World Bank.
Meanwhile, credit ratings agency Fitch said Turkey’s sovereign rating would not change even if no deal with the IMF was signed. In a statement Thursday, Fitch said a deal would be positive, but Turkey would find other means of financing even if no accord was signed. The statement is "presumably music to the ears of Prime Minister Recep Tayyip Erdoğan," said Timothy Ash, head of Central Eastern Europe, Middle East and Africa, or CEEMEA, research at the Royal Bank of Scotland, in an investor note Friday.