RADICAL DECISIONS TO BE TAKEN TO REDUCE IMPORTS
Turkish authorities are preparing steps to reduce the foreign trade deficit by $20 billion over the next three to four years for a permanent improvement in the current account deficit, which is seen as the biggest threat to Turkey’s economic stability. Speaking to Reuters, four officials said that steps will be taken to reduce public sector imports and boost private sector investments rather than imports, particularly in light of bolstering investment in strategic sectors. The most important of these will be bolstering investments that could not be made due to the high initial cost but are now achievable because of private sector incentives.
Open-ended incentives will play an important role
“Our goal is to deliver Turkey’s economy to a structure free from fragility in three to four years. The core target is to provide a 30-40 percent ($20-25 billion) permanent decrease in the foreign trade balance,” a senior economy official said. The project-based investment incentive system, which gave the Council of Ministers the right to give open-ended support last year, will play an important role in these incentives. Economy Minister Nihat Zeybekci said that they have been negotiating with 20 companies for projects with an investment value of TRY 80 billion, which will reduce imports by $6-7 billion annually starting from 2019. Another economy official stated that the project-based incentives will provide up to $10 billion in support for foreign trade within three to four years. “We expect to contribute $10 billion, including $3-4 billion to exports,” he said. Authorities added that the sectors to be encouraged include automotive, transportation, health, communication and agriculture technologies, energy, metallurgy and petrochemicals.
Another decision to limit imports came into effect on March 1 after which time direct imports to be made by public institutions and organizations are now subject to the permission of the Ministry of Economy. According to the officials, similar decisions in the public sector will be implemented in the near future. “It is possible to make indirect imports subject to permission following the direct imports of public institutions and organizations,” an official said.