Turkey will make structural reforms to improve the investment climate for domestic and international entrepreneurs, the country’s treasury and finance minister said Tuesday.
"Turkey's risk premium will be reduced through economic policies that will be implemented in a transparent, predictable and stable manner," Lutfi Elvan noted during budget discussions in the Grand National Assembly.
Elvan said the government will reduce the cost of foreign borrowing and strengthen the total maturity structure with longer-term bond issues.
"We will achieve a higher quality and stronger debt profile by adding a maturity extension to our country's low debt stock," he stressed.
Elvan also said that the country will provide price stability, protect fiscal discipline, increase coordination between monetary and fiscal policies and enhance the investment climate.
"We will focus on a production-based income model while generating social and economic transformation programs to reduce the negative effects of the [coronavirus] pandemic," he noted.
- 'Turkey to enter stable growth period in 2022, 2023'
Elvan said the recovery trend in consumption, investments and exports will boost growth and help the economy grow 0.3% in 2020.
Pointing out that Turkey will enter a period of stable growth in 2022 and 2023 with the recovery in domestic demand, he said: "The continuation of the improvement in foreign demand and the government's export-backed growth preference will support this process."
This will be designed and controlled in a way that does not conflict with our efforts to maintain macroeconomic stability and fight inflation, he said.
"Decisive steps will be taken to strengthen financial stability and transform our production capacity into an export-oriented innovative structure that has internalized digital transformation,” he added.
Also drawing attention to the policies implemented by countries to limit the effects of the pandemic on their economies, Elvan said that due to large-scale financial support packages, the budget deficit and debt stock all over the world entered an increasing trend in 2020.
"The ratio of budget deficits to the national incomes of developing countries is expected to rise to 10.4% and the ratio of debt stock to GDP to 61.4% in this period
"As for Turkey, these ratios are expected to be well below the average of developing countries, at 4.9% and 41.1%, respectively."
Stating that the ratio of the general government debt stock to GDP, calculated according to the EU, decreased to 39.4% in the second quarter of 2020, Elvan said: "This remained well below the Maastricht criteria and the EU average."
"We significantly reduced the sensitivity of the general government debt stock to interest, exchange rate and liquidity risks," he stressed, adding analyses made to measure this sensitivity point to the soundness of the debt structure.
By Merve Ozlem Cakir