— No plans to go to IMF, focus on foreign direct investment
— Government to see certain expenditure cuts
— No non-market measures or capital controls
— Turkey not expecting any fines against Halkbank
Turkish Finance Minister Berat Albayrak hosted a conference call with global investors on Thursday in a bid to reassure them that policymakers are able to tackle the worst currency crisis the country has suffered since 2001, Reuters reported.
Speaking to around 6,000 investors in his first such call since being appointed to the cabinet in July, Albayrak, who is also Turkish President Recep Tayyip Erdoğan’s son-in-law, said Turkey would navigate this period of US sanctions with other parties such as Germany, Russia and China.
Turkey has no plans to go to the International Monetary Fund (IMF) for support over its currency crisis, he said.
Albayrak told investors that Turkey would meet its fiscal target through tighter spending. It would also focus on attracting foreign direct investment, he said.
Albayrak said the government will see certain expenditure cuts and that the revenue side was showing positive performance.
The minister said he expected a 6 billion lira ($1.04 billion) primary surplus for the end of this year. ($1 = 5.7711 lira).
Turkey has never implemented non-market measures, and capital controls will never be on the agenda, he said, adding that structural reforms and labor market flexibility are also a priority.
Turkey’s government will stand by its public banks if they need help and Turkey would announce additional sources of funding in the next couple of weeks, he added.
Albayrak also said Turkey is not expecting any fines against state-owned Halkbank.
A former Halkbank executive was convicted by a US court in January of helping evade US sanctions on Iran.
Albayrak told investors that monetary policy was not enough to fight inflation and that a coordinated, well-balanced approach between monetary and fiscal policy was needed.
“The finance minister provided some comfort by acknowledging that rebalancing the economy is a priority through both fiscal and monetary policy and that capital controls aren’t an option,” Cristina de Alessi, BNP Paribas asset manager told Reuters in response to Albayrak’s conference.
“My overall impression is that he showed enough commitment for sentiment and especially the FX markets to sustain recent gains, and perhaps build on them somewhat. He highlighted that the country has a strong track record of crisis management and that the key has been sound fiscal policy and it will be this time also,” said Richard Segal of Manulife, a Canada-based finance company.
“Considering this was his first call with investors, it went okay in that he didn’t demonize investors or use an antagonistic tone, versus Erdoğan’s for example, that there is an economic war against the country. That he didn’t allude to, which is a small positive, but having said that there were still important details that were not addressed,” said Claudia Calich, from the London-based M&G investment company
The IMF could help Turkey to get through its currency crisis, and the German government favors such an emergency measure, a German government source told Reuters on Thursday.
“The Federal Government believes that an IMF program could help Turkey,” the government source said on condition of anonymity.