Delaying Reforms Could Be Dangerous

In a statement to the British business newspaper the Financial Times, Serdengecti pointed out the delay in the reforms has been sending false signals to financial markets. "There was no problem when the agreement was announced, but some problems have arisen since then and caused the agreement to fall behind. This agreement would have been completed long time ago and I believe the more the agreement is delayed, the more the threat rises," said Serdengecti. Though public expenses are under the control of the government, the delay of the agreement is the only apparent cloud on the relatively bright economic horizon. "We must conclude this agreement. I think the government agrees with this as well," added Serdengecti. The letter of intent about the standby agreement, which concerns $10 million of resource use over the period from 2005 to 2007, requires the approval of the Income Management bill by Parliament, and additional banking and social security laws to be sent to parliament. State Minister Abdullatif Sener declared this week that the disagreements on the banking draft have been compromised and that the draft text would soon be sent to Parliament after some minor alterations.

Serdengecti expressed that he is not worried about Turkey’s reduction of interest rates while developed countries are increasing them due to ever rising oil prices. The Central Bank President noted that concerns over the current exchange deficit have been over-exaggerated, as the deficit has been kept under control by financial discipline and money policy. Serdengecti reminded that despite the growth target of five percent for this year, economic stability has not yet been secured and warned that the booms and busts of the past have not yet been left behind.