Turkey, already an enviable economy in debt-ridden and stagnating Europe with its growing economy, seems to be polishing its public financial records by lowering the public debt level.
The ratio of Turkey’s public debt to its gross domestic product (GDP), which is below 40 percent, will fall further to 37 percent by the end of the year, said Central Bank Governor Erdem Başçı at a meeting in the eastern province of Elazığ July 6.
One of the most important factors that decouples Turkey from Europe is the public debt burden, Başçı said at the meeting titled “Monetary Policies,” organized jointly by the Central Bank, daily Dünya and the Elazığ Trade and Industry Chamber according to the Anatolia news agency.
He said attentive economy policies should be carried out to preserve the low level of public debt-to-GDP ratio, which currently is slightly below 40 percent. It is very likely that this already-successful rate will fall about 3 percent by the end of this year.
In Europe, Greece has the highest debt-to-GDP ratio at 160 percent, according to the April 2012 World Economic Outlook Database by the International Monetary Fund. Many other European Union countries, which pose a threat to the economic stability of the region, are in not much of a better condition. The ratio is at 120 percent for Italy, 106 percent for Portugal, 104 percent for Ireland and 68 percent for Spain.
The figure is not astonishing when it comes to Germany, the economic powerhouse of the region, with 81 percent, or France with 86 percent. The debt-to-GDP ratio for the United States is 102 percent, and 229 percent for Japan.
Current account deficit
On the other hand Turkey, reliant on external energy sources, pays a huge bill for oil and gas, which in return swells the current account deficit of the country, a soft spot of the economy long emphasized by international rating agencies as a reason not to promote the country to an “investable” level.
Başçı said there was significant improvement on this matter as Turkey’s exports had increased by 20 percent, while imports were on a flat trend.
The current account gap - excluding energy imports - is almost closed, while the deficit - including energy costs - is in decline, he said.
He also said the foreign exchange reserve, which is now at $93 billion, would hit $100 billion by the end of the year.
Touching on the improving inflation expectations, the governor said the Central Bank would issue a new forecast on the year-end inflation rate at the end of July.
The latest forecast of the Central Bank for year-end inflation is 6.5 percent.
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Source : hurriyetdailynews.com
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