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    ‘What shall we do’ part for the IMF

    Fatih Özatay, PhD08 January 2009 - Okunma Sayısı: 1384



    Oh Dear, what will happen now? Just yesterday, I was making fun of various expressions of 'I told you so'. However, "I told you so". I swear I did. And what is more, not only I told you so; we told you so...

    You are brainstorming to solve a problem. You gathered around with a group of people. It is okay until this point; but if among the group there is a person that does not need 'brainstorming', you are ruined. He does not need brainstorming at all; because he is clued up, he knows everything!

    If you read the paragraph above reverse,  you can even derive a 'politics thesis': If you do not want an argument  but want to seem like you are arguing, just invite few friends that does not need brainstorming. It is doubtless that this kind of people is not observed only in friend gatherings... Anyway, the moral of this story is: Turkey has always suffered from 'clued up' people.

    The writer of these lines (avoiding to say 'I') commented on the issue for the first time on October 19 and recommended that a fund that will provide a sort of guarantee for the credits to be extended by banks to even slightly stimulate the closing domestic credit channel and that budget resources can be allocated for this purpose. On the column 'What must be done?' on October 20, he detailed the recommendation. His last article on the issue was published in this column on December 18: He touched upon the news showing that a legal modification to restructure bank credits might be introduced and said that the mentioned kind of guarantee system might be useful for credit restructuring.

    If course it was not just me that focused on this recommendation; we, as TEPAV, also discussed on this recommendation. The related policy note was published on TEPAV web site on November 18: "An example of measures against crisis: Credit Guarantee System" (

    'Other people' have also developed similar recommendations: Recently, transactions via checks and bills have diminished significantly.  For instance, producers are refraining from delivering goods to the main dealer and thus the main dealer is refraining to deliver goods to other dealers. The reason is obvious: In such an environment, he is not sure whether he will get his money back or not.

    Therefore, to diminish potential losses, people take the risk of lowering production and refrain from making forwarded sales. As a result, production falls down, commerce decreases, and unemployment rises. To eliminate the obstruction here a transaction insurance system similar to credit guarantee system might be developed at least for the short term. Those interested in the use might pay attention to General Director of Petro-chemistry Co, for instance.

    If you ask why touched upon the 'I' 'we' and 'the others' have told you so issue, I recommend you to read a very important document published by the IMF on December 29. The document is titled "Fiscal policy for crisis" (IMF Staff Position Note, SPN/08/01) and reflects the official views of the IMF. Among the recommended policies is the establishment of credit guarantee systems. And you will see the majority of the recommendations enumerated in the document also in this column, columns of colleagues and in the recent policy notes written by TEPAV.

    Please do not get me wrong. The issue is not about how 'I', 'we' and 'the others' have developed extraordinarily wonderful ideas. In addition, there does not exist any extraordinarily wonderful ideas at all.  The issue is also not the fact that we have found the ideas before the IMF. The issue is just that Turkey have wasted valuable times. If we would have discussed on a healthy economic program including such recommendations, we could have put the program in force three months ago. And if necessary, we would have negotiated with the IMF for financial support. The is this the issue.


    This commentary was published in Radikal daily on 04.01.2009