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"Crisis Measures for the Turkish Economy" Report
25/03/2009 - Viewed 1406 times
ANKARA- TEPAV releaesed the "Crisis Measures for the Turkish Economy" report. Underlining that the global crisis now became a crisis for Turkey, the report maintained: that "Nonetheless, it is possible to limit the growth and employment losses posed by the crisis. This study aims to contribute to the discussions to determine the conceptual framework on which the economic program devoted to fulfill this target shall be based. The main conclusion to be drawn from this study is that the damage can be limited."

The report prepared by TEPAV Global Crisis working Group argues that 5.5 percent contraction is highly possible unless systematic measures are implemented, as observed currently. Expressing that the mentioned forecast incurs a downward risk, the report added: "In the basis scenario where no systemic economic measure is implemented and no IMF agreement is signed, the unemployment rate, which stood at 13.6 percent as of December 2008, is estimated to rise to 16.6 percent in December 2009. This implies that around 1.2 million people are faced with the risk of losing their jobs in 2009."

Underlining that the objective of the report is to show that if precautionary measures are taken, these outcomes as well as more unfavorable ones can be prevented to a certain extent, the report continued:

"The framework represented under the context of this report shows that, by introducing measures in three main policy areas, the contractionary trend of the economy can be controlled and employment losses can be limited. The first policy area is ensuring the functioning of foreign and domestic credit channels as well utilizing public resources. Through a method based on a loan guarantee fund mechanism, it is aimed to restructure existing loans and extend new loans. This way, excess tightening in the balance sheets of companies can be prevented. Inter alia, incorporating the principle that the Central Bank provides liquidity for the banking sector through the discount window in parallel to the volume of loans they extend to the corporate sector will further improve the efficiency of the system. The second policy area is stimulating domestic demand via selective public expenditures. The principle here is to identify the public expenditure items that will have the highest impact in the current year and to transfer resources to the most appropriate areas. Third; it is necessary to ensure external fund inflows to the economy immediately during this year. In this context, the IMF agreement to be signed is extremely important in particular with respect to strengthening capital structure of the banking system."

The report stated that the cost of the measures to be implemented will be on the public budget. The report added that the initial costs rising during the implementation of the measures will start to fall down along with the contraction limiting impact of the measures. Maintaining that the budget will in any case go into a process of rapid deterioration due to economic contraction trend, the report said "it is highly important to adopt a multi-year fiscal discipline framework that includes credible commitments showing how the budget which is already in a process of rapid deterioration due to the economic contraction can again be turned into a credible document by means of the measures to be taken in the upcoming years."

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