Transition to conventional policies will be smooth
WOULD YOU PLEASE DETAIL THE USD 418 BN CORRUPTION THAT KEMAL KILICDARO˹ GLU STARTED TO VOICE EVEN BEFORE THE ELECTŧON PROCESS?
When a comparison is made between the non-tender methods in public tenders, negotiated tendering, build-operate-transfer, and the price that emerges within the framework of a model in public-private sector cooperation, high corruption is detected. The difference between the tender size and the required size is USD 418bn. This does not include public damages caused by ignorance. That is why Common Policies Consensus Text of the Nation Alliance has a corruption section, which include these statements: Money smuggled abroad from corruption will be brought back. We will establish the Assets Recovery Office.” This office is one of the offices within the framework of the European Union acquis and is a mechanism that works in the world. On the other hand, we have findings that there is a financing opportunity of USD 300bn if you do the right things. It’s not just debt, it’s predominantly direct investment and funds.
WHERE WILL THE USD 300BN FINANCING THAT YOU EXPECT BE USED?
In Turkey, we need to ensure that industrial production develops in conditions that can compete with the world, especially in digital transformation and green transformation, which can rapidly increase productivity in the country. In other words, we need to grow by producing, not by borrowing and running the country into debt. In order to be able to consume by producing, you need to have a production structure that can compete with the world. A series of reforms from labor markets to education should be made as soon as possible for this. The wealth provided by growth needs to be distributed to all segments of society. Otherwise, if you exclude any segment from the growth process, the growth will not be sustainable. However, healthy growth strategy should be formed without destroying the environment, increasing inflation, and running the country into debt. This is the condition of sustainability in economy. Zero carbon emissions, Paris Climate Agreement, ensuring compliance with the EU Green Deal are important points for the growth to be permanent and for the uninterrupted flow of funds to finance growth.
On the other hand, Turkey currently does not need the IMF to obtain funds from global markets or to encourage domestic investors to re-invest. When we do the right things, we can easily find resources form the global markets. Prices in the country are no longer determined by the market, but by regulations. The economy is overheated and fixed exchange rate policies are applied for a long time, resulting in record breaking current account deficit and foreign trade deficit every month. No one understands the financial suppression and complex regulations that have been in use in the country. That is why market players are nervous. If you have such a current account deficit, especially at a time when your foreign exchange reserves are insufficient, you face a rapidly shrinking public finance area due to the election economy.
WHAT IS YOUR PERSPECTIVE ON FX˹PROTECT˹ ED TRY DEPOSIT ACCOUNTS ˷KKM˸?
KKM has an effect that the increase in the current account deficit and the decrease in reserves is not reflected in the foreign exchange price, but the cost of this is very high. TRY 90bn from the budget and the same amount of money from the Central Bank was used to finance the KKM. Its size has reached USD 88bn. No new KKM account will be opened when the existing accounts become due. We will implement this strategy in a way that will not disturb the balances in the foreign exchange market.
PRESIDENT ERDOAAN SAID THAT THE MINIMUM WAGE WILL INCREASE IN JULY. WHAT WILL YOUR POLICY BE IN THIS REGARD?
The minimum wage, which has gradually become the general wage, should definitely increase.
What you call the minimum wage is below the poverty line. Even in a family where four people work for minimum wage, the poverty line cannot be exceeded. This definitely needs to be fixed. In inflationary environments, it is very difficult to protect salaries and wages from inflation. The key is to reduce inflation. For this reason, we will adopt measures that will both reduce inflation and increase income. Our commitment in the Common Policies Consensus Text is to bring inflation down to single digits within two years. In order for this to happen with minimal sacrifice from growth, we will also take measures to ensure confidence in the management quickly.
WHAT WILL THE MONETARY POLICY BE LIKE?
Currently, there is a policy framework that is neither orthodox nor heterodox, which leaves no playing field for the markets, but is not sustainable. This system, which is self-evident and whose communication is not understood by the market players, must quickly return to the accepted conventional line. Interventions made from the back door, financial repressions, regulations that have become more complex, all must be simplified as soon as possible. And communication within the framework of monetary policy must be made effective. For this to happen, trust must be established. You have to be very careful while doing all this. It is possible to get rid of this fragility, but this must be done with the meticulousness of a neurosurgeon.
WHAT IS THERE FOR THE BUSINESS WORLD?
In particular property rights, life and property security must be secured. We will establish a market friendly regulatory, and supervisory framework. Our promise to the business world is a fair and reliable working environment. Our business people are already extremely talented. They know the world very well, and if we allow them to act comfortably within that framework, the Turkish economy will rapidly enter the growth process again.
Turkey currently does not need the IMF to obtain funds from global markets or to encourage domestic investors to re-invest. When we do the right things, we can easily find resources form the global markets.