The World Bank director for Turkey, Ajay Chhibber, says the current economic stabilization program is a golden opportunity and the country must not let early success go to its head and abandon the program.
He said many countries have put stabilization programs into effect, but Turkey's is bearing fruit fastest. He said this worries him because it might cause the government to slack off.
Chhibber spoke on the role of small and medium-scale enterprises (SMEs) in the economic program and voiced his opinions on the program in a conference on SMEs at the Izmir International Fair (IIF).
Imports are soaring and the foreign trade deficit is 2.5 percent of the gross national product (GNP), said Chhibber.
He said measures should be taken against this boom in imports because Turkey cannot maintain its economy with such a large current account deficit.
He said the increase in imports was the reason for the higher-than-expected July inflation. He also suggested that aggregate demand had decreased and the growth rate had remained the same. However, he predicted that the growth rate would be 5.5 percent instead of the government's 5 percent forecast for 2000.
He said that Turkey's was an ambitious program and so far partial improvement has been seen in the government's financial situation due to both economic recovery and an increase in tax revenues, which went up 40 percent in real terms in the second quarter. He added that bank lending to the real sector went up 43 percent in the same period and the refinery industry, which was damaged in the quake, has grown 14 percent.
However, he said, "The program could be better, and Turkey can do this if it makes appropriate decisions." Turkey has had some successful results in its past programs but then it stopped implementing these programs, said Chhibber. "This is not the case in other countries. They stop a program if it's unsuccessful. Here a program is abandoned if some positive results are obtained within a few years. This is a gross mistake."
He said the program is a golden opportunity for Turkey and it must be continued. He warned that if the anti-inflation struggle is left now, the entire process will have to be restarted very soon. —(Albawaba-MEBG)
© 2000 Mena Report (www.menareport.com)
