Turkish Economy In Year 2000 Essay

1673 words - 7 pages

TURKISH ECONOMY IN YEAR 2000 The year 2000 was a step for Turkish economy which began to use the macro economic restructuring programme from the beginnig of the year. According to this porgramme aims were: · Increasing FX by approximately 20 percent and changing the idea of FX in people's minds as a profitable investment area, · Decreasing the inflation rates to 20 percent, · Decreasing the demand of deposits for one night, · Availability of Turkish Lira, · Making Turkey more interesting for foreign investors, · Flow of foreign currency into the country.The programme was planning to make the T-bills and G-bonds charming for the foreign investors. The most important aim was to make the TL available with the help of cash flow of foreign currency into the country and Central Bank. The government didn' want to think it's investment in short term anymore and wanted to make TL investments more appealing. At the beginning of the year most of the people knew that inflation rate could not be decreased to 20 percent but they also knew that with this programme a cercent decrease would be achieved. And the government was also expecting a boom in tourism during the summer season.In the first period of 2000 not only the restructuring programme but also the relations with neighbour countries influenced Turkey. Greece was one of them which was seen as a barrier for several years. With the improving reletions also greece voted for Turkey by beeing a candidate of membership to European Union Countries.At the begining of the year IMKB was seen as the best investment opportunity which was also worldwide succesful as the end of the year 1999. According to the IMF stand by aggrement Turkey was expecting a big flow of funds from the foreign markets to the country. This aggrement also stipulated Turkey decreasing the inflation rate to 25 percent for consumer and to 20 percent for wholesale prices.Central Bank made public the first quartile devaluation as 2.1 percent. That meant with an interest rate over 3.2 percent TL investments were more appealing than other investment areas. For no risk takers one night deposits were the best choice with fluctuating interest rates. But if someone did not like the fluctuating interest rates T-bills and G-bonds were alternative choices for investing the money.During the second and the third months of 2000 the ministry of treasury made people pay taxes for T-bills and G-bonds and this tax revenue was added to the institutional tax assestment. Of course this behaviour was against all law rights because those bonds were just investment opportunuties where banks were not allowed to own them. Therefore a taxation of those bonds and one night deposits was against law. This would have killed the market for bonds and deposits which had reached $ 10 billion volume on those days. If this was not stopped it would have damages on treasury by paying it's domestic...

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