10/30/2008

Turkey seeks to boost investor confidence

The Financial Times - Turkey’s finance minister last week presented budget plans designed to reassure investors that the government would not deviate from its financial discipline. Kemal Unakitan, finance minister, also said Turkey would introduce fiscal rules to cement its commitment to budget discipline. He said the budget deficit would narrow from 1.5% to 1.2% of gross domestic product in 2009, with a primary surplus of 4% of GDP and spending growth in line with previously announced targets. The budget – the first this decade prepared without the involvement of the International Monetary Fund – assumes growth will reach 4% this year and next. The IMF on the other hand predicts growth of 3% in 2009. Budget plans will be finalised at the end of the year after discussion in parliament. Mr Unakitan also announced measures to stem the sell-off in Turkish assets and soften the impact of the global crisis. He said there would be extra help for small and medium businesses, a tax break for local investors in equities, and inducements for Turks to repatriate savings held offshore. Separately, the central bank stepped up measures to boost foreign exchange liquidity, saying it would double banks’ foreign exchange trading limits to a total $10.8bn from Friday.

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