Minister Albayrak: First priority is not the budget, but unemployment

Amidst efforts to revive economic activity and shield employment and sectors affected by the coronavirus pandemic, the Turkish government is working on a comprehensive employment shield package to support jobs, Treasury and Finance Minister Berat Albayrak said Friday.

The matter of employment will top Turkey’s normalization efforts, Albayrak told a meeting with journalists in Istanbul.

“For this package, being prepared by the Family, Labor and Social Services Ministry, we also are contributing as much as we can in coordination,” Albayrak said. “We’re doing work that will provide relief to the markets with a package we can call an employment shield,” he added.

The minister’s remarks came after media separately reported Ankara could extend a three-month ban on layoffs that were imposed in April to offset shuttered businesses and unemployment in the face of the coronavirus pandemic.

On Friday, the Central Bank announced a new lending facility worth TL40 bn, which can be tapped directly by mid-size companies to finish fixed investment projects in progress.

Normalization primary goal

Albayrak’s remarks come as the country started gradually easing restrictions taken to stem the spread of the coronavirus outbreak. The country has resumed domestic flights, reopened restaurants, cafes and parks and lifted intercity travel curbs this week.

The government will first manage the normalization process in the markets, followed by the stabilization process, he explained.

With new initiatives to accelerate the country’s development, Albayrak stressed that Turkey will manage this period in an integrated and balanced way with the legs of exports, domestic market demand and tourism.

The minister said Turkey has left a three-month period behind in which it positively met the challenges posed, in comparison with other developed countries.

“Compared to many countries, Turkey has taken more decisive and rapid steps and action plans in terms of health and economy. We have born the fruits of this. We continue to do so,” Albayrak said.

Deficits loom large, but some fiscal room left

According to BloombergHT, job creation in Turkey is more of a priority at the moment than fiscal discipline, Treasury and Finance Minister Berat Albayrak said, highlighting efforts to revive economic activity at the expense of the government’s coffers. May cash budget data reported on Friday showed a deficit of TL9.6 billion ($1.4 bn).

The government’s priority is to shield employment and sectors that are affected by the coronavirus pandemic, Albayrak said at a press conference Friday, according to Bloomberg HT.

The labor ministry is working on an employment package and the total fiscal support to contain the economic fallout from the coronavirus reached 5% of gross domestic product, or just over $750 billion, as of the first quarter, Albayrak was cited as saying.

A relatively low level of public debt gives authorities some room to contain the economic disruptions from the pandemic. As of 2019, the Turkish government’s debt stock stood at 33.1% of gross domestic product. BNP Paribas SA estimates that government debt-to-GDP in emerging markets will jump by about 8 percentage points to an average of 50% in 2020.

The government still faces fiscal constraints. Turkey ran its largest budget deficit in about a decade last year. The shortfall is widening as measures to contain the pandemic paralyzed economic activity, while spending jumped and tax deferrals chipped away at government revenue, commented Bloomberg.

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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and and has contributed to the financial daily Referans and the liberal daily Radikal.