Turkey's finance minister rules out IMF and capital controls

Turkey's finance minister Berat Albayrak tried to reassure thousands of international investors on a conference call, in which he pledged to fix the economic troubles that have seen the country spiral into a currency crisis
Thursday, 16 August 2018 19:04

Turkish Treasury and Finance Minister Berat Albayrak hosted a conference call with global investors on Thursday in a bid to reassure them that Ankara is able to tackle the worst currency crisis the country has suffered since 2001.

Some 6,000 investors and economists had registered for the call. 

In the conference call, Albayrak, President Tayyip Erdoğan's son-in-law, said Turkey fully understood and recognised all its domestic challenges but was dealing with what he described as a market anomaly. 

The Turkish lira hit a record low of 7.24 to the dollar this week, down 40 percent this year. The national currency recovered somewhat from record lows , a day after Qatar pledged $15 billion in investments to help Turkey's economy. The lira strengthened some 4 percent against the dollar, to around 5.75 per dollar.

Albayrak indicated Ankara would largely use fiscal measures to slow down the economy and reduce a hefty current account deficit and inflation running at 16 percent. The minister said the Turkish AKP government would be asking ministries for expenditure cuts of 10-30 per cent and that it would be aiming at a primary surplus of TL6bn for the rest of this year. 

He said the government would not hesitate to provide support to the banking sector. The banks were capable of managing the volatility, and there had been no major flow of cash out of deposits lately, he added.

He said Turkey's banks are "healthy and strong" and that implementing structural reforms and maintain a tight monetary policy to fight inflation remains a priority. The minister ruled out any move to limit money flows. He said Ankara had no plans to impose capital controls to stop money flowing abroad.

Albayrak rejected any idea of seeking a bailout from the International Monetary Fund (IMF).

"There is no IMF plan, we have focused on attracting direct investments," he said.

After he finished speaking, the lira was little changed from beforehand, meaning it remains down around 34 percent against the dollar this year.

President Erdoğan has repeatedly told Turks to exchange gold and hard currency into lira, saying the country was involved in an economic war with enemies. However, Turkey's central bank data showed foreign currency deposits held by local investors rose to $159.9 billion in the week to Aug. 10, from $158.6 billion a week earlier, Reuters reported.

"We will turn this crisis into an opportunity," said presidency spokesperson İbrahim Kalın after a cabinet meeting chaired by Erdoğan, saying measures taken so far had helped bring about a "rapid improvement process" over the last two days.