Tuncay Özilhan, Chairman of the Turkish Industrialists’ and Businessmen’s Association (TÜSİAD) High Advisory Council (YİK), underlined the need for a wide range of reforms to solve the current account deficit problem, and underlined that in order to increase production and investment, first of all, it is necessary to ensure maroeconomic stability.
After meeting with Mehmet Şimşek, the Minister of Treasury and Finance, Özilhan said in his speech at the TÜSİAD YİK meeting, “We shared our findings and suggestions with Şimşek. We expect the program to contribute towards macroeconomic stability,” he said.
Özilhan said, “If there is an inflow of money from abroad, it is necessary to fortify the Central Bank’s reserves.”
Özilhan said, “Fight against inflation and trust in TL should be the first priority. “The way to fight inflation is not to add value to the Turkish lira,” he said.
At the TÜSİAD High Advisory Council meeting, TÜSİAD High Advisory Council Chairman Tuncay Özilhan, who stated that the Turkish economy is experiencing a twin deficit, but the problems are not insoluble, also made statements about the meeting with Minister Şimşek.
Özilhan stated that the indicators indicate that the economy is going through the most troubled period of the last 10 years, “Accordingly, exports decline, current account deficit increases, net reserves go negative, budget deficit grows, high cost of living reduces purchasing power, high inflation distorts balance sheets and increases transaction costs. “Despite the low policy interest rate, investments do not recover, TL loses value, foreign investors do not come. For the first time in a long time, we are experiencing a “twin deficit”,” he said.
Drawing attention to the importance of preparing and announcing a reputable economic program in line with the statements made so far, Özilhan said, “Making appointments to key institutions that prioritize merit and giving confidence to the markets, and to a working order in accordance with the main job descriptions of institutions that are effective in shaping economic policies, especially the Central Bank. “With these steps, confidence in the economy will quickly recover both at home and abroad, and it will be possible to proceed with safe steps,” he said.
Investments must be revived
Emphasizing that the number of entrepreneurs in Turkey is very high, Tuncay Özilhan said, “Interventive management in the market in countries with such a competitive environment and strong business capacity does not produce results. In Turkey, there has never been a continuous spread in all areas of the economy, as in China or the Soviet Union. There was no statist economic model.
In the market model, the state does not intervene selectively to shape the market balances, but compiles the data that will guide the sector, makes analyzes, makes applications to prevent market disruptions, but the market is determined in line with supply and demand. Fiscal policies, social policies, production and foreign trade policies are used. With these measures to be taken, we need to revive investments,” he said.
“We had an open and sincere meeting with Şimşek”
Expressing that they met with Minister Mehmet Şimşek as TÜSİAD management before the meeting, Özilhan stated that they shared their findings and suggestions regarding the economic situation, and said, “We shared it with the Minister. It was an open and sincere meeting. We look forward to his contribution in that direction.”
Underlining the need for a three-pronged program for the solution of the problems of the Turkish economy, Özilhan listed these three pillars as: “These three pillars are macroeconomic stability, structural reforms and the rule of law.” Emphasizing the importance of starting all three of these topics simultaneously, Özilhan said, “In this case, each of them will increase the effectiveness of the others and it will be possible to solve the problems in a shorter time and at less cost.”
“Projects that are in the planning stage may be postponed”
Özilhan stated that it is necessary to start by providing macroeconomic stability above all and continued his words as follows:
“Fighting the devil of inflation and restoring trust in the TL is our top priority. However, the way to fight inflation is not to add value to the TL. Because when TL gains value, this inevitably makes imports cheaper, exports more expensive, and the external deficit rises. The process we live in after the 2001 crisis tells us. He taught this lesson well.
In the program to be announced, attention will be paid to whether the spending discipline in the fiscal policy is complied with. Savings can be made in some items in order to balance the increase in the public expenditures caused by necessities such as earthquakes and the protection of the purchasing power of the people. In particular, projects with limited impact in terms of production moves, which are still in the planning stage, and which may have high environmental impacts, may be postponed.
“Istanbul Convention must be returned”
Speaking at the TÜSİAD High Advisory Board, TÜİSAD President Orhan Turan underlined that the fact that women who make up half of the society are still subject to violence and are discriminated against in business and social life are not characteristics befitting the second century of Turkey. Turan said, “For this reason, one of our expectations from the first parliament of our second century is to return to the Istanbul Convention, which we left in 2021. In addition, to hold tighter to the Law No. 6284 on the Protection of Family and Prevention of Violence Against Women, which is the strongest legal regulation we have at the national level, and in the most effective way. We have to implement it,” he said.
Turan stated that as we enter the second century of the Republic, the issue of ensuring gender equality should be left out of the discussion, and emphasized that the inequalities between men and women in the areas of access to education, participation in the workforce, taking part in decision-making positions in politics and working life and care responsibilities should be eliminated.
“Access to finance has steadily declined”
Orhan Turan, who pointed out that the real sector’s access to credit is becoming increasingly difficult despite the continuous reduction of the benchmark interest rate, stated that the rate of increase in commercial loans has fallen well below the inflation rate, and that the problem of access to finance has put pressure on investments. This led to delays in investment decisions, a decrease in the capacity to create new jobs and a weakening of growth,” he said.
Stating that the production-consumption gap has widened since the first quarter of 2021, Turan reminded that while the industry decreased by 0.8 percent annually in the first quarter growth figures of 2023, consumption increased by 16.2 percent, “Monetary and financial policies need to change in order to overcome this situation. It is important that the real sector will be healthy as long as the financial sector is healthy and can make its own pricing Policies to be followed should ensure that the real sector can access financing through ordinary means and pave the way for production and investment.
In this context, I wish success to Vice President Cevdet Yılmaz, Treasury and Finance Minister Mehmet Şimşek and Central Bank Governor Hafize Gaye Erkan in their duties.”
“Let’s quickly complete the preparations for the earthquake”
Emphasizing the need to implement a planned and participatory process in disaster management by strengthening institutions and rules, Turan said, “For this reason, let’s not let political polarization and short-term priorities overshadow this real survival problem.
Let’s continue to work with all our strength to heal the wounds of the earthquake zone. Let’s quickly complete our preparations for the Marmara region,” he said.