Deputy Premier Babacan: Debt crisis of countries poses serious threat for Euro Zone

Turkey’s deputy prime minister said on Sunday that strength of global economy was fading away each passing day.

Ali Babacan said the world was undergoing rapid changes, and witnessing abnormal market developments and substantial volatility every day.

“Strength of global economy is steadily fading away and outlook is becoming bleak,” Babacan said in a message he sent to the International Monetary Fund (IMF) and World Bank.

Babacan will attend annual meetings of IMF and World Bank in Washington between September 23 and 25.

Deputy Prime Minister Babacan said debt crisis of countries went up, which posed a serious threat and concerns about Euro Zone economies increased.

Ali Babacan said political conflicts, and lack of coordination and decisive action were the result of those problems.

“Weak growth prospects undermined market confidence and made it harder to achieve significant fiscal consolidation,” he said.
Babacan said Turkey had urged policymakers that they should develop a medium-term approach and announce credible targets, which would help re-build confidence in markets.

The minister said countries should improve the regulation of commodity markets and increase the transparency of price setting mechanism.

Babacan defined high structural unemployment as another challenge, and called on countries to prepare the workforce for the requirements of the new economy through active market programs.

Minister Babacan said international policy (coordination and coordinated efforts) were the key to all the challenges, and international financial institutes, especially IMF, had pivotal role to play while implementing those coordinated policies.

Babacan said the IMF should complete 14th quota review on time and implement restructuring of the board of executive directors.

On Turkish economy, Babacan said Turkey had a strong growth performance in the last six quarters, and Turkey grew 9 percent in 2010 and the growth rate jumped to 10.2 percent in the first half of 2011.

Babacan said Turkey created new job opportunities for 1.4 million people in a year, which brought down unemployment rate to 9.2 percent from 10.2 percent.

The minister said Turkish government units, Central Bank, Treasury Undersecretariat, and the Banking Regulation and Supervision Agency had taken several measures in close coordination, and with those steps Turkey tried to avert the overheating concerns curb excessive rise in indebtness ratios and solidify financial stability.

Babacan said structural reforms implemented in last decade were one of main factors behind the favorable economic performance of Turkey, and expressed the governmen’t commitment to enhance the effectiveness of all those reforms and consolidated the success Turkey had achieved so far.

“We have been going through critical times for the global economy and financial stability, and our decision and efforts have the power to affect many years to come,” he said.

Babacan said he was suggesting that all policymakers handle the issue with decisiveness and forward looking approach.
Deputy Prime Minister Babacan also said policymakers should not hesitate bite the bullet when necessary.

18 September 2011

SOURCE: CUMHURIYET.COM.TR