ECONOMY

Turkey must use growth boom to cut debt: OECD

PARIS (AFP) – Turkey, recovering from a major recession, must use its exceptionally strong growth to manage its public debt burden and rein in a widening current account deficit, the OECD warned in a report yesterday. Even though Turkey has made a firm recovery from a severe economic crisis in 2000-2001 and should achieve 10 percent growth at the end of 2004, it must watch out for a significant increase in its current account deficit, the Organization of Economic Cooperation and Development said. The deficit reached more than 7 percent of GDP in the first half of 2004 and was unlikely to fall below 5 percent of GDP for the year, the OECD said. «Its financing continues to be based on debt creation, generating concerns about its sustainability, while foreign direct investment remains weak,» the OECD warned. «In future, the authorities should devote the additional revenue gains from stronger growth to government debt reduction, in order to improve debt sustainability and keep a firm fiscal stance,» it added. Such a move would help tame the strong growth rate and lessen any additional pressures on the current account and domestic prices. The OECD praised Turkey for its success in bringing down chronic inflation, which is expected to dip below the 12 percent year-end target.