April fool

Dunya Executive - - REPORT - Murat BASBOGA

Sometimes you watch a movie or hear a song and remember the day you first saw or listened to the song, like a spark. Almost every eventful year passes by; you cannot refrain yourself from remembering that particular moment in time. This time I’m talking about the financial crisis that Turkey faced in April 1994. Last week, Ugur Gurses, a prominent columnist from Hurriyet, wrote extensively about developments before the crisis and its aftermath. To give you a plot of the story, the PM at the time (Tansu Ciller) forced the Turkish Treasury to bypass bill auctions to increase liquidity and decrease the rates. But things turned upside down quickly. After a few attempts to avoid auctions, the liquidity turned to foreign exchange. The lira plunged dramatically (more than 10 percent in January and its value halved in April 1994), and the government announced economic measures to repair the damage. It took years to fix the economy. As a personal note, I produced a documentary with Guventurk Gorgulu and Mustafa Varuy about the crisis for Kanal E Television (patriarch of CNBCe TV), which was broadcast in April 1997. Turkey also faced another crisis which resulted in a collapse of the banking system in 2001. Furthermore, the effort to catch a falling knife is always challenging. To calm down markets and nervous investors, a detailed roadmap of reforms and execution is needed, as all analysts agree.

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