Structural transformation, price stability to boost FDI: Şimşek
ANKARA
Price stability, a sustainable current account deficit, and structural transformation are expected to lead to an increase in direct investments, Finance Minister Mehmet Şimşek has said.
"We do not think short-term market fluctuations will have an impact at this point,” the minister told reporters following the Economy Coordination Board meeting held in the province of Giresun on April 18.
The economy program, which the government is implementing, is not based on portfolio investments, Şimşek said, adding that Türkiye is among the countries that would be relatively less affected by external shocks.
During the recent volatility in the markets, Türkiye’s CDS rose to around 380 basis points but later fell below 330, the minister noted.
“When we say, 'the effects are limited and temporary,' this is not just a wish but we are rather referring to past experiences,” Şimşek said.
According to the minister, they plan to borrow $11 billion from international markets this year, with $2.5 billion already realized in the first quarter.
However, it is too early to assess the lasting effects of recent developments in domestic financial markets and the global economy on the government program's objectives, Şimşek said.
“These developments have both positive and negative effects on inflation…Looking at the net impact, we anticipate that inflation will remain within the forecast range,” he added.
There has been a temporary deterioration in inflation expectations, however, the tightening of financial conditions will have a positive effect on demand-driven inflation, according to Şimşek.
“Most importantly, there has been a significant decline in commodity prices, especially oil. If prices remain at these levels, this will have a disinflationary effect,” he said.
Şimşek stated that the Turkish Lira has experienced a limited depreciation and that, due to weak demand, they expect the impact of exchange rate pass-through on inflation to be limited.
Meetings in the US
Şimşek also said that he will be in the U.S. this week to attend the IMF-World Bank Spring Meeting and the G-20 meeting.
In New York, he will hold meetings with rating institutions and representatives of the U.S.-based investors, Şimşek said.
In Washington, he will attend and deliver a speech at a conference organized by the American Chamber of Commerce.
The minister stated that he will engage in bilateral talks and attend meetings organized by investment banks.
“In all these meetings, we will emphasize that there is no change in the program and that there is strong political support for it,” Şimşek said.
