ECONOMY

Turkey awaiting $20 billion in FDI

ANKARA – Turkish Finance Minister Kemal Unakitan said yesterday he expects more than $20 billion in foreign direct investment in 2008 and that even without planned privatizations, half of that sum is already guaranteed. Foreign direct investment (FDI), which amounted to around $22 billion last year, is vital for helping to plug Turkey’s large current account deficit. «In 2008, even if no privatizations are carried out at all, Turkey has guaranteed $10 billion of foreign investment. As our economy gets stronger, more money will come in,» Unakitan told a conference. A series of privatizations is scheduled for launch during 2008, including the sale of major bridges and highways, electricity grids and a stake in partly privatized lender Halkbank. Investors are still awaiting a firm timetable for some of the big ticket sales. Initial bids for the long-delayed privatization of cigarette maker Tekel were collected this week, while an initial public offering for Turk Telekom is scheduled for May. Turkey’s current account deficit is forecast at $40.78 billion this year, according to the central bank’s latest external expectations survey. «Finance Minister Unakitan’s comments on FDI just highlight the absolute necessity to keep to the privatization program and fiscal restraint, as $10 billion would only guarantee a 25 percent coverage ratio of the c/a deficit this year,» said Simon Quijano-Evans, economist at Unicredit MIB. Unakitan said Turkey was protected from global financial turbulence due to improved public finances and lack of subprime mortgage loan problems. «Our banking system is the strongest it has ever been in the republican era. There are no unpaid debts in the Turkish economy and money coming into Turkey does not leave the country. We have no reason to fear,» he said. But he also said inflation had to be lowered further and high growth should be sustained. «We have to lower inflation. Countries with high inflation are hit by global crises… We need to make further progress on it. It should fall to 2-4 percent like in European countries,» he said. Turkey’s consumer price inflation stood at 8.39 percent in 2007, twice the official target. Unakitan said he was confident Turkey’s economy would grow more than 5 percent, thanks to its dynamism and reforms such as boosting research and development incentives would help achieve this.