ANKARA
Turkish Prime Minister Ahmet Davutoglu met with his nine Cabinet ministers, banking regulators, and Central Bank Governor Erdem Basci on Tuesday to discuss the state of the economy..
The meeting came after the Turkish lira hit record lows on Friday. The lira was buying $0.37, a record low on Friday afternoon. The lira has lost more than 11 percent of its value against the dollar since January 2015.
A statement issued after the meeting by the Prime Minister's office said that the government will maintain the strict fiscal discipline as foreseen in its Medium-Term Economic Program.
“During the meeting, officials arrived at a consensus: The foundation of the country’s economy is very strong and inflation and the current account deficit, which were the main priority of the country’s Medium-Term Economic Program, are showing more positive results than expected due to impact of the decline in oil prices,” the statement said.
The statement also said that recent economic indicators from the U.S. point to a better-than-expected economic recovery, but the recovery has not yet started in the European Union.
"On the other hand, rapid monetary expansion by the European Central Bank led to the appreciation of dollar, and this has resulted in fluctuations in Turkey as well as in all developing countries. In this period, the depreciation of the Turkish lira was a little bit greater than that of other emerging markets," the statement said.
In line with government's strong and balanced goal for growth, the government is working on an economic package that will support industrial production, employment and the capital structure of Turkish companies. This package will be released in the near future,” the statement said.
Turkish officials at the meeting agreed that the Turkish banking system has resistant structure against similar financial shocks, according to the statement.
The statement praised Turkey's banking watchdog, the Central Bank and its Capital Markets Board on their roles in the country's economic management.
"The Banking Regulation and Supervision Agency has maintained a healthy structure for the banking system by its effective regulation and inspection since 2002. The Capital Markets Board has continued its efforts to develop the capital markets within the framework of new law and it gives confidence to the international markets through its effective regulation and supervision," the statement said.
After the 2001 financial crisis in the country, the government started a comprehensive restructuring program which created the Banking Regulation and Supervision Agency. This change has greatly increased reliability in the banking sector and encouraged sound business policies, the statement noted.
The Central Bank of the Republic of Turkey is independent, and has the tools to carry out its mission in the framework of the law, the statement said.
"The Central Bank has proven its effectiveness by taking measures against fluctuations in international financial markets since 2002, including the bank’s successful interventions during the 2009 global financial crisis. The Central Bank has been in close consultation with the government for more than 12 years. Today, our Central Bank takes the necessary measures at the appropriate times in line with its monetary policy targets," the statement said.
Central Bank Governor Erdem Bascİ will brief President Recep Tayyip Erdogan on Wednesday about the latest developments after the meeting of Prime Minister Ahmet Davutoglu and nine Cabinet ministers Tuesday.
The Turkish economy has enjoyed a strong growth rate of more than 5 percent since 2002, fueled by trade and foreign investment. The growth has been faster than that of much of the developed world.
Turkish government has set the goals of increasing Turkey's GDP to $1.3 trillion by 2018 and to $2 trillion by 2023 from $820 billion in 2013.
