Fiscal Policy In Turkey

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Fiscal Policy In Turkey

  1. 1. ERSTE GROUPFISCAL POLICY IN TURKEYMarch 22, 2012Mehmet ŞimşekMinister of Finance
  2. 2. TURKEY MANAGING A SOFT LANDING
  3. 3. Turkey: Strong Recovery, butModeratingSource: TURKSTAT94.8100.087.0110.5808590951001051101152007-Q1Q2Q3Q42008-Q1Q2Q3Q42009-Q1Q2Q3Q42010-Q1Q2Q3Q42011-Q1Q2Q3RealGDP(s.a,,2008Q1=100)
  4. 4. LoanGrowth*(13weekmovingavg.,y-on-y%)Turkey: Credit Growth is Slowing DownSource: Central Bank of Capital.* Adjusted for exhange movements.01020304050602011 2007-2011 ortalama 2012Jan.Feb.Mar.Apr.May.Jun.Jul.Aug.Sep.Oct.Nov.Dec.2007-2011 averagePointing to a Soft Landing
  5. 5. Turkey: Industrial ProductionOn a downward trendSource: TURKSTAT-25-20-15-10-505101520252007-13579112008-13579112009-13579112010-13579112011-13579112012-1IndustrialProduction(y-on-y,%)
  6. 6. Turkey: Current Account DeficitCurrentAccountBalance(12MonthRolling,USDmn)Source: Central Bank of Turkey-80.000-70.000-60.000-50.000-40.000-30.000-20.000-10.000010.00020.0002007-13579112008-13579112009-13579112010-13579112011-13579112012-1Current Account Non Energy Current Account
  7. 7. Turkey: REER still Supportive of AdjustmentSource: Central Bank of Turkey607080901001101201301402003-147102004-147102005-147102006-147102007-147102008-147102009-147102010-147102011-147102012-1CPI Based Real Effective Exchange Rate CPI - Developing Countries - Based Real Effective Exchange Rate(2003=100)
  8. 8. 4% Growth, still likely?
  9. 9. Despite Strong Credit Growth,Banks are well-capitalized Capital adequacy ratio is above the ratios of many emerging markets. This rate is almost twice the minimum legal limit of 8 %.90,8 % of legal equitycapital consists ofprinciple capitaldefined as equitycapital of goodquality.Legal limit: 8 percent051015202530352003-12004-12005-12006-12007-12008-12009-12010-12011-1Target rate: 12 percentCapitalAdequacyRatio(%)Source: BRSA
  10. 10. Strong Asset QualitySource: BRSA
  11. 11. Return on Equity20 % ROE since 2007
  12. 12. Job Creation is supportiveEmployment(ThousandPeople)Source: TURKSTAT19.00020.00021.00022.00023.00024.00025.0002007 201120,73824,110
  13. 13. UnemploymentRate,s.a.(December2007=100)80901001101201301401502007-12482008-12482009-12482010-12482011-12Source: Eurostat, TURKSTATEuro AreaTurkeyEU 27Unemployment at decade low
  14. 14. Turkey: Real Sector ConfidenceHolding up wellSource: Central Bank of Turkey50607080901001101201302007-13579112008-13579112009-13579112010-13579112011-13579112012-1RealSectorConfidenceIndex
  15. 15. Turkey: Composite Leading IndicatorSource: Central Bank of Turkey1301401501601701801902002007-13579112008-13579112009-13579112010-13579112011-13579112012-1CompositeLeadingIndicatorIndexPoints to a Soft Landing
  16. 16. TURKEY COMMITTED TOFISCAL DISCIPLINE
  17. 17. JapanGreeceBelgiumUSAIndiaCanadaFranceEnglandBrazilArgentinaPolandMexicoTurkeySpainIrelandPortugalItalySlovakRepublic0246810120 50 100 150 200 250Keeping Debt and Deficit on a Downward TrendBudget Deficit and Debt Stock (2011)Source: IMF WEO Uptade Jan-12, IMF WEO Sep-11 and MTPBudgetDeficit/GDPDebt/GDP
  18. 18. AK Party means Business0123456789101994-2002 2003-20117.73.3Source: Ministry of FinanceBudgetDeficit(%GDP)Achieved fiscal targets except 2009
  19. 19. Lowering Debt-to-GDPSource: Treasury77.939.832.02030405060708020012002200320042005200620072008200920102011*2012*2013*2014*GeneralGovernmentDebtStock/GDP(%)Satisfying Maastricht Criteria since 2004
  20. 20. Zeroing Net Public Sector DebtSource: Treasury23.788.44.2-20020406080100200020012002200320042005200620072008200920102011-I2011-II2011-IIINetExternalPublicDebtStock(BillionTL)
  21. 21. Domestic Debt StockSource: Treasury1983 199231941992 2002194149.8702002 2011149.870368.7781983-19921992-20022002-2011MillionTLMillionTLMillionTL
  22. 22. Interest Payments to Tax RevenuesSource: Ministry of FinanceWe lowered interest bill since 1981InterestPayments/TaxRevenues(%)
  23. 23. But we areworking on itShort-term Medium-term Long-termCurrent Account is a Challenge
  24. 24. Short-Term
  25. 25. ReciprocityForeigners can invest in Turkey through theacquisition of real estate property
  26. 26. We must be doing something rightSource: TreasuryNumberofCompanieswithInternationalCapital(Cumulative,inThousands)5,66,78,811,71516,219,322,125,429,4 29,5051015202530352002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Jan
  27. 27. Foreign Direct Investment InflowsSource: Central Bank of TurkeyBilliondollar14,8109,40204060801001201980-2002 2003-2011
  28. 28. Medium-Term
  29. 29. New Incentive SchemeObjectives:- Reduce regional development gaps- Reduce current account deficit- Promote efficient allocation of resources to high value-added investmentsGeneralIncentiveSchemeRegionalIncentiveSchemeLarge ScaleProjectsStrategicInvestments
  30. 30. R&D and INNOVATION
  31. 31. Why is R&D so significant for us?The share of high and medium-hightechnology sectors in production and inexport is low.R&DSource: Ministry of Development27,672.435,664.401020304050607080High and Medium-High Low and Medium-LowProduction Export
  32. 32. •0.842010•0.532002The ratio of R&D expenses to GDP increased by 58 % in 9 years.Source: The Scientific and Technological Council of TurkeyRatio of R&D Expenses to GDP
  33. 33. R&D Expenses per Capita (PPP, $)In 2002, 46 $In 2010, 127 $2002-10, 176 % increaseSource: The Scientific and Technological Council of Turkey
  34. 34. Our Scientific PapersNumber ofscientific papersin 2002 was10,807It increased to28,194 in 2010.In 2002, we ranked22nd in the worldIn 2010, we ranked18th in the worldSource: The Scientific and Technological Council of Turkey
  35. 35. Source: Turkish Patent InstıtutePatent Application and Registration
  36. 36. Trademark Applications• 36,5782002• 117,4442011Source: Turkish Patent Instıtute
  37. 37. Türkiye,In 2011, under the 20 most reputable countries listprepared by Brand Office, Turkey increased its brand valueby 19.8 %to 373 billion dollars.High Brand Value
  38. 38. Industrial Design ApplicationsWith 36,578 applications in 2011, Turkey ranked among the top 3 in Europe, with Germanyand France.The rate of increase from 2002 to 2011 was 80 %.Source: TPI
  39. 39. ENERGY
  40. 40. Source: Ministry of Development, BloombergAverage Crude Oil Prices and Energy Imports(BrentType,Dollar/Barrel)EnergyImports(BillionDollars)02040608010012001020304050602002 2003 2004 2005 2006 2007 2008 2009 2010 2011Energy Import Oil Prices92354111
  41. 41. Investment in EnergyHydro Carbon 19,492 MWHydroelectric Power Plant 15,582 MWOther Renewables 4,958 MWUNDER CONSTRUCTION 40,035 MWCURRENT CAPACITY 53,360 MWTOTAL 93,595 MW
  42. 42. Source: European Wind Energy Association (EWEA)Wind Energy Capacity2002 2011Turkey used to rank 35th in wind energy capacity in Europe.In 2002, Turkey ranks 10th in Europe.35.10.
  43. 43. STRENGTHENING CAPITAL MARKETS
  44. 44. New incentives for deepening FinancialMarketsMeasures to extend the Maturity ofDepositsEnhancing the status of Istanbul as aRegional Financial Center
  45. 45. Long-Term
  46. 46. EDUCATION
  47. 47. We againallocated thelargest shareto education inthe 2012budget.Resources Allocated to EducationSource: Ministry of FinanceEducation is our priority.BillionTL
  48. 48. Source: Ministry of Development of Republic of TurkeyIncreased access to EducationDuring our governing periods, we showed a marked improvement in the grossschooling rates.
  49. 49. Increasing the Quality of EducationWith Fatih Project, we are providing our childrenInternet AccessSmart BoardsTablet ComputersOther Information Technology Tools
  50. 50. INFRASTRUCTURE
  51. 51. 1,714 KmTotal of Motorways4,387 KmTotal of State andProvincial DualCarriagewaysTotal: 6,101 KmDual CarriagewayNetwork(January 1, 2003)2,236 KmTotal of Motorways18,991 KmTotal of State andProvincial DualCarriagewaysTotal: 21,227 KmDual CarriagewayNetwork(December 31,2011)Before 2003, only 6 cities were connected to each other via dual carriageway. Now, we have 74 cities21,227 Km3,125 Km3,061 Km27,413 KmDual carriageways put into serviceDual carriageways under constructionDual-carriageways to be put out to tenderTotal
  52. 52. Our RailwaysPRE-REPUBLIC RAILWAY NETWORK 4,136 km MAINLINEEARLY YEARS OF THE REPUBLIC (1923-1950) 3,764 km MAINLINE (134 km on annual average)1951-2002 945 km MAINLINE (18 km on annual average)2003 DEN GÜNÜMÜZE KADAR (2010 dahil) 1.076 km ANAHAT (Yılda Ortalama 135 km)UNDER CONSTRUCTION 1,987 km MAINLINE2003-2010 1,076 km MAINLINE (135 km on annual average)İSTANBULEDİRNEESKİŞEHİRPOLATLIANKARAKONYAİZMİRSİVASAFYONKAYSERİBURSA ERZİNCANERZURUMKARSMERSİNADANA GAZİANTEPDİYARBAKIRELAZIĞMALATYAZONGULDAKSAMSUNBANDIRMAVANTATVAN2010 : 11.940 km ( Konvansiyonel + Yüksek Hızlı )Adapazarı52Source: Ministry of Transport2010:11.940 km (Conventional+High Speed)
  53. 53. High Speed Railway Projects53İSTANBULESKİŞEHİR POLATLIANKARAKONYASİVAS212km533km405kmYOZGATHST Lines under Construction: ESK-İST and ANK-SİVASCompleted High Speed Train (HST) Lines: ANK-Eskişehir and ANK-KonyaYerköyHST at tender phase : Ankara-İzmir and Ankara-BursaAFYONİZMİRMANİSA 624kmBURSABİLECİK110 km
  54. 54. The Project of the CenturyGreat efficiency in travel time- Gebze to Halkalı under 105 minutes- Across the Bosphorus strait in 4 minutes.One way 75,000passanger/hour
  55. 55. Passenger Traffic at the AirportsPlane Traffic at the Airports55Source: General Directorate of State Airports Authority0200.000400.000600.000800.0001.000.0001.200.0001.400.0002003 2011154,218290,346218,405460,218156,582581,271529,2051,331,835Overflıght International Domestic Total020.000.00040.000.00060.000.00080.000.000100.000.000120.000.000Domestic International9,147,43958,329,26225,296,21659,018,31834,443,655117,347,580Domestic International Total
  56. 56. Downside RisksOil pricesEurozone debt crisisGeopolitical risks (Iran)
  57. 57. TURKEY, INTERNATIONALSTANDING
  58. 58. Corruption Perceptions IndexTURKEYSource: Transperancy Intenational
  59. 59. Corruption Perceptions Index Ranking (2002-2011)020406080100120140160TURKEYITALYBRAZILCHINAGREECEINDIAARGENTINAINDONESIAMEXICORUSSIA616973 758095 100 100 1001432011(among 183 countries)2002(among 102 countries)0102030405060708090100ITALYGREECEBRAZILMEXICOCHINATURKEYARGENTINAIDNIARUSSIAINDONESIA3144 455859 657073 7496Source: Transperancy Intenational
  60. 60. Ease of Doing Business Index (2006-2012)020406080100120ITALYMEXICOARGENTINARUSSIAGREECECHINATURKEYINDONESIAINDIABRAZIL707377 79 8091 93115 116 119020406080100120140MEXICOTURKEYITALYCHINAGREECEARGENTINARUSSIABRAZILINDONESIAINDIA537187911001131201261291322006(among 155 countries)2012(among 183 countries)Source: Doing Bussiness
  61. 61. Global Competitiveness Index (2005-2012)0102030405060708090CHINAITALYINDONESIABRAZILINDIAMEXICOTURKEYRUSSIAARGENTINAGREECE2643465356 5859668590Within the period of 2005-2012, Turkey has ranked higher than Russia, Argentina and Greece.2005(among 125 countries)2012(among 142 countries)01020304050607080ITALYINDIAGREECECHINARUSSIAARGENTINABRAZILMEXICOINDONESIATURKEY384547485354 57596971Source: World Economic Forum
  62. 62. THANK YOU

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