Babacan: EU has long way to go despite austerity measures

The minister was speaking to reporters in the Finnish capital of Helsinki on Monday, where he arrived to participate in a conference about the continent’s lingering sovereign debt crisis. Babacan had a closed-door meeting with Finnish President Sauli Niinistö, and also met with former Finnish President Tarja Halonen. The deputy minister also held a separate meeting with representatives of the country’s leading companies along with the members of the Finnish-Turkish Businessmen Association (FİTTİAD). Babacan noted that Finland’s economy is relatively in a better position compared to the rest of the EU, and because of that Turkish entrepreneurs are seeking new investment opportunities in the country. “Employee rights and taxes are two of the major criteria Turkish businessmen take into consideration when entering foreign markets,” Babacan said following his meeting with the businessmen. “Turkish-owned companies in Finland are demanding that the Turkish government ease the procedures for money transfers between the two countries’ banks as well as simplify the procedures for land sales and residence permits for foreigners in Turkey. Babacan noted that the details of a new government incentive package could be announced before the end of this week. “The draft for the new incentive package was sent to the Prime Ministry. I think members of our Economy Coordination Board [EKK] will share the new package at a press conference this week,” he noted. A government plan announced last year envisages offering incentives to increase production capacity and competitive power in six sectors -- machinery, iron and steel, automotive, food and agriculture, chemicals, and textiles. Feasibility studies have been under way since June. The government holds these six sectors most responsible for the country’s growing current account deficit (CAD). Prime Minister Recep Tayyip Erdoğan has called on foreign investors to benefit from the new package.

Sunday’s hike in natural gas and electricity prices was also on Babacan’s agenda. “The price increases were inevitable due to unprecedented developments in global oil markets. … We, as the government, are not happy putting new burdens on citizens; however, circumstances brought us here,” he asserted. Asked whether the energy price hikes would fuel an upward pressure in inflation, the deputy prime minister recalled that the government had already calculated possible fluctuations in its earlier announced year-end inflation estimates. Babacan added the central bank would separately revise its own inflation target for 2021 -- 5 percent -- if it finds it necessary. The minister also delivered a speech on the political, economic and industrial effects of the ongoing economic crisis. Babacan was scheduled to travel to Sudan late on Monday.