Turkey's financial stability body to review forex risks

By Bahattin Gonultas and Fatih Erkan Dogan

ANKARA (AA) – Turkey’s deputy prime minister has said the country’s Financial Stability Committee is set to discuss problems in the private sector management of foreign exchange risks.

Speaking to broadcaster NTV on Tuesday, Mehmet Simsek said: “Tomorrow or next day we will discuss the foreign exchange risks for businesses and inflation in the Financial Stability Committee.”

The Turkish lira has declined as much as 16.87 percent against U.S. dollar, underlining risks in foreign debt payments in the Turkish private sector, which is largely dependent on external capital inflow.

Recent data also revealed that the Turkish economy contracted 1.8 percent year-on-year in the third quarter of 2016, the first time since 2009.

"2016 was a very challenging year but Turkey's economy showed an extraordinary resilience," Simsek said, adding: "I believe risks in 2017 will be more manageable."

Simsek said Turkish companies had a significant foreign currency deficit and its possible effects are important, linking the lira's course in the near term to external capital inflow to the country.

Referring to the view of the Turkish economy from outside of the country, Simsek said the government expected the gap between reality and perception to start to close in 2017.

Simsek also touched on the subject of strained relations between Turkey and the EU, saying the pair had a long-lasting relationship. Although it was not as good as wished sometimes, this did not signal a disengagement, Simsek said.

"The EU agreed to widen the scope of the Customs Union agreement with Turkey recently. This is very important," Simsek said.

"EU accession is very important for us. We will not waste it. Certainly there will be some discord but I do not see a breakup," he added.