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‘No price hike for electricity unless oil, gas prices rise’

Economy Minister and chief negotiator for EU accession talks Ali Babacan has rejected assertions by the opposition that the government is planning to allow price hikes in electricity after the elections.

After a budget revision in April, austerity packages that aim to save 0.6 percent of the gross national product (GNP) for the economy were established, Babacan noted, adding that the package did not anticipate any increase in gas and electricity prices.

Babacan emphasized that all promises have so far been fulfilled. “Unless there is an extraordinary increase in the price of oil, electricity and gas prices will remain the same,” he asserted. He assessed recent developments in the economy as the July 22 elections approach, in an interview with the Anatolia news agency. He underlined that due to an increase in deposits, the banking sector had grown stronger. In 2002 bank deposits totaled YTL 129 billion but had reached YTL 298 billion by July 6 of this year. “This increase is the most concrete proof of the faith in Turkey’s economy,” he said.

Saying that banks once funded the Treasury, Babacan noted that a decrease in public borrowing has led to banks providing sources for the development of the economy, particularly for industrialists. “Banks extended a total of YTL 32.5 billion in loans in 2002; this amount multiplied sixfold to hit YTL 189 billion in 2007,” he said, emphasizing that the increase in commercial, private, housing and vehicle loans multiplied by four-and-a-half times to reach YTL 112 billion. Babacan asserted that the total currency reserves of the private sector rose to YTL 46.6 billion as of June and said Turkey’s total foreign-exchange reserves consequently increased to YTL 114 billion.

He also stated that while Turkey’s net foreign debt in 2002 was 49 percent of national income, that figure had decreased to 27.4 percent by the end of 2006. “As the rate of inflation declines to 4 or 5 percent, Turkey will have single-digit interest rates as well,” he added. Because of the regular increase in foreign capital since 2002, Babacan claimed, “Foreign capital is expected to be around $20 billion by the end of 2007.”

He also announced that the present stand-by regulation with the International Monetary Fund (IMF) will end by May 2008 and that a new scheme will be devised in the first months of that year with consideration of internal and external developments.

Babacan said that the “wait-and-see” attitude associated with the elections had slowed investment spending of private sector went down a little, adding: “The length of this ambiguity depends on the haste of the formation of a new government and election of a new president.”

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