WASHINGTON D.C., March 6 (A.A) - Michael Deppler, the IMF European I Department's Director said on Wednesday that as Turkey successfully implements its economy programme, its future is promising in respect of economy.
Speaking to NTV and CNBC-E tv channels in Washington D.C., Deppler said that IMF hopes to see five percent growth and an inflation rate of 20 percent in Turkey next year.
The economy in Turkey has strong foundations today, he said adding that time has to be given to economy to yield results.
Deppler said that the export figures of Turkey were lower than expected due to the global economic conditions, stressing that the real reason of that was not the fact that Turkish Lira revaluated. The value of foreign exchange in Turkey shows the trust in the market, he said and noted that IMF supports floating exchange rate system. ''We can see that the trust in the market is high as the intereset rates are also low,'' he said adding that IMF is not warm to the idea of giving special incentives to certain real sector circles.
''Cost of some interventions made in November and December was paid in January and February. Because such kind of temporary measures, planned for some specific sectors, don't provide lasting solutions. Because those are artifical measures. Building confidence is necessary for growth, and I think confidence comes back. With the confidence, people will think of the time being more than the future. Decrease of interest rates is much more important then providing support to a specific sector. Everybody will benefit from the growth that will be provided following the decrease of interest rates.''
Estimating that growth will start again in Turkey in the near future, Deppler said they expected the growth to start soon, noting that it could have started so far. Deppler said the fundamental reason for this was that international atmosphere did not help. He said, ''we are at a turning point at the moment. We are expected transition to growth in a short time. Rate of interests decreased to an important rate, and this is expected to provide the growth.''
Deppler said he was of the idea that this year's 3 percent growth rate could be realized.
Pointing out that February crisis, experienced in Turkey last year, would not be repeated, noting that, ''there were weaknessess in the system at those times, and the people even did not know that weakness. Now that the basis is strong.''
Deppler said they expressed pleasure over the low inflation figures in February, adding that, ''January-February monthly inflation average is around three percent. The monthly average should be 2.5 percent to catch 35 percent annual target.''
Deppler stated that certain circles in Turkey supported inflation. ''Some people think it's better to have a little more inflation. Some think inflation is harmless. This is a wrong view. Turkey's recent pas proves this. It's very important to pull down the inflation. Turkey is planning to switch to inflation targetting in the coming months,'' he said.
When asked if Turkey could switch to inflation targetting this summer, Deppler said ''Yes it can happen.''
''Turkey has a problem with continuing its success when it makes an achievement,'' he continued. ''For example, the first program became successful in 2000. Later people started to think other things. Then the November crisis came. A number of good steps were taken in January. Then they gave attention to other things and another crisis came in February. There were positive steps in May but this was followed by trouble again.''
Praising the current performance of the government, Deppler said ''Now the government is very good at money policies and implementing the program. But this has to continue. Trust for Turkey should increase.''
Deppler said that they admitted that it was a mistake to start with a crawling peg system in the IMF supported stand-by program which was put into prace in Dec. 1999.
''When we look behind the crawling peg system was a mistake because the system needed discipline and strength against shocks. But this didn't exist in Turkey. Later we switched to the floating exchange system since the crawling ped didn't fit Turkey's conditions. Floating exchange system is one of the main pillars of the present program. This is a guarantee against crises,'' he said.
Praising the bill which proposes capital support to private banks, Deppler said ''Capital support law means help to the growth in the state rather than helping bank. It means bringing discipline to the banks.''
Deppler indicated that the state banks were in very good situation right now and efforts were continuing to make also private banks stronger. He added that banking and money policies were being separated from politics.
Deppler concluded his words by saying that Turkey has to make improvements in its public sector, tax system and investment environment in the coming months.