DUBAI - International Monetary Fund (IMF) European I Department Director Michael Deppler said on Monday that he did not think that short term capital transactions on portfolio which was called as hot money would be a threat for Turkey as an important part of portfolio investments were made by Turkish people in Turkey.
Noting that an important part of portfolio investments were made by Turkish people in Turkey, Deppler said that this was an example which was not seen in other countries and added that Turkish made such investments were acting in long term, not short term.
Deppler replied questions of A.A. correspondent in Dubai. Noting that some measures could be taken to prevent hot money flow in global means, Deppler said that one of these measures was to put dissuasive taxes and the other one was to decrease interests. He added that if interest rates were decreased as parallel to inflation, short term portfolio investments would be less attractive.
Deppler said that developments in Turkish economy were quite positive and now it was estimated that growth rate would exceed five percent and 20 percent inflation target was considered as a normal figure while it was approached with suspicion in the past.
Noting that interest rates of treasury bonds started to decrease better than it was envisioned in the program, Deppler said that the decrease in interest rates would continue with the determination in programs. Deppler said that current transaction items were a little concerning, but trend in tourism and export would decrease this concern.
Deppler said that when the program was examined completely, recent economic data were positive and he added that economic data was giving the signs that targets would be reached.
Upon a question about the effects of Turkish Lira's (TL) gaining extreme value, Deppler said that they were not concerned with this because Central Bank had intervened appropriately when required and also export rates and productivity increased and this did not create a negative situation in the aspect of Turkey's competition capacity. Emphasizing that they were closely following the developments in TL, Deppler said that the program had two main elements and one of them was the continuation of the government's commitment to program and the other element was floating exchange rates regime, which he defined as a unique shock-absorbing regime.
Upon a question on omitting six zeros from TL, Deppler said that TL's regaining value would be possible with decreasing inflation to one digit figures and making it permanent.
Deppler said that he hoped that the practice of erasing zeros from TL could be started in a short time if economic program was carried on.
When asked what the biggest risk for Turkish economy could be, Deppler said that politicians' digressing from the program would be the biggest risk for Turkish economy, but the current government knew this risk and was acting according to program.
Upon a question on ending stand-by, Deppler said that ending stand-by in the end of 2004 was related with government's preference and sides could decide with which financial arrangement the relations would continue in mutual meetings.
Deppler emphasized that normally ending a program was related with the success of that program.
When asked how the crisis in Argentina would affect Turkish economy, Deppler said that the case in Argentina was different and he did not think it would negatively affect Turkish economy.
Noting that it was necessary to be prepared against unexpected situations, Deppler said that IMF had always concerned against such situations.
Deppler said that the Sixth Review was very important as issues such as tax and 2004 budget would be taken up and he added that he hoped that the Sixth Review would be completed within programmed process.
(GC-AÖ) 22.09.2003