When the world gets closer.

We help you see farther.

Sign up to our expressly international daily newsletter.

Turkey

The Truth Hurts: Why Turkey’s Decision To Block An IMF Report Exposes More Than It Hides

Editorial: As concerns about the economy deepen, Prime Minister Recep Tayyip Erdogan’s government has blocked publication of the IMF’s latest report on Turkey. It’s the latest sign of a lack of professionalism.

Istanbul market (John Walker)
Istanbul market (John Walker)
Erdal Sağlam

ISTANBUL – The government of Prime Minister Recep Tayyip Erdogan has blocked the public release of the International Monetary Fund's latest report on Turkey. The IMF allows individual governments the right to deny permission to publish a country report if they so choose, though this right is rarely exercised.

So what should we make of the Turkish government preventing the latest report from going public? "Smart governments' seldom exercise this right, which amounts to rejecting transparency. They generally choose to go public with a report even if it is not in their favor because they know that not publishing it will have much greater consequences.

So, does the IMF report contain shocking developments we don't yet know about? Personally, I think it is unlikely that the report contains any criticism we haven't heard or talked about. In all likelihood it mentions the current economic imbalances and weaknesses. These are obvious to everyone.

Bit if there isn't much that is new, whey then would Deputy Prime Minister Ali Babacan and his team have taken such a drastic decision?

What they fear is that, should the report be made public, it will make international investors skittish and put a short-term end to the inflow of foreign capital. This seems to me proof that they do not want to hurt the flow of liquid cash into the country ahead of elections on June 12; hence the nominal measures they have forced the Central Bank to adopt against the current account deficit and inflow of foreign cash.

So, why are exchange rates rising? This is the point that they are missing. Of course there are factors like global economical imbalances, an insufficient increase in production and the ongoing crisis in Greece. But even so, Turkey has been on a negative track for the past month compared to other developing countries.

The foreign capital flow into Turkey has been decreasing in recent months. The reason for this is a growing perception of the risk inherent to the Turkish economy. Earlier expectations that Turkey's economic rating would go up after elections have begun to be replaced by worries that just the opposite could happen.

Clues in the JP Morgan report

So, why did they stop the IMF report from coming out? Herein lies the real amateurishness. Just as with other countries, the IMF likes to see its country reports published and to let investors know about any risks it might see. This has always been the case. The IMF also disapproves of governments that block publication.

Do not imagine that in a situation like this, the IMF simply sits back and keeps quiet. Instead, when asked, it will continue to inform investors curious about risks in Turkey's economic situation.

Just to remind anyone who might launch into a conspiracy theory at this point: the IMF doesn't follow this procedure just for Turkey, but for all countries as part of its international mandate. The IMF's influence over international banks and brokerages is also no secret.

Seen from another perspective, this is the kind of professionalism the IMF expects. If the present Turkish government were made up of professional leaders instead of a bureaucracy of devoted ideological believers, they would understand this attitude.

In sum, this is also the context we can use to view last week's JP Morgan report advising investors to reduce the weight of Turkish holdings in their portfolios. "In Turkey, high inflation, deteriorating current account deficit and relatively complacent policy worries us. The hikes in reserve ratio requirements (RRRs) have cut consensus earnings forecasts for banks," said JPMorgan.

Are these lies? Do we not face mounting risk? Aren't we expecting hard times after the election? Even if the government blocks publication of the IMF report, they cannot prevent the truth from getting out.

photo - John Walker

You've reached your monthly limit of free articles.
To read the full article, please subscribe.
Get unlimited access. Support Worldcrunch's unique mission:
  • Exclusive coverage from the world's top sources, in English for the first time.
  • Stories from the best international journalists.
  • Insights from the widest range of perspectives, languages and countries
Already a subscriber? Log in

When the world gets closer, we help you see farther

Sign up to our expressly international daily newsletter!
Economy

In Uganda, Having A "Rolex" Is About Not Going Hungry

Experts fear the higher food prices resulting from the conflict in Ukraine could jeopardize the health of many Ugandans. Take a look at this ritzy-named simple dish.

Zziwa Fred, a street vendor who runs two fast-food businesses in central Uganda, rolls a freshly prepared chapati known as a Rolex.

Nakisanze Segawa

WAKISO — Godfrey Kizito takes a break from his busy shoe repair shop every day so he can enjoy his favorite snack, a vegetable and egg omelet rolled in a freshly prepared chapati known as a Rolex. But for the past few weeks, this daily ritual has given him neither the satisfaction nor the sustenance he is used to consuming. Kizito says this much-needed staple has shrunk in size.

Stay up-to-date with the latest on the Russia-Ukraine war, with our exclusive international coverage.

Sign up to our free daily newsletter.

Most streets and markets in Uganda have at least one vendor firing up a hot plate ready to cook the Rolex, short for rolled eggs — which usually comes with tomatoes, cabbage and onion and is priced anywhere from 1,000 to 2,000 Ugandan shillings (28 to 57 cents). Street vendor Farouk Kiyaga says many of his customers share Kizito’s disappointment over the dwindling size of Uganda’s most popular street food, but Kiyaga is struggling with the rising cost of wheat and cooking oil.

Russia’s invasion of Ukraine has halted exports out of the two countries, which account for about 26% of wheat exports globally and about 80% of the world’s exports of sunflower oil, pushing prices to an all-time high, according to the Food and Agriculture Organization, a United Nations agency. Not only oil and wheat are affected. Prices of the most consumed foods worldwide, such as meat, grains and dairy products, hit their highest levels ever in March, making a nutritious meal even harder to buy for those who already struggle to feed themselves and their families. The U.N. organization warns the conflict could lead to as many as 13.1 million more people going hungry between 2022 and 2026.

Keep reading...Show less

When the world gets closer, we help you see farther

Sign up to our expressly international daily newsletter!
You've reached your monthly limit of free articles.
To read the full article, please subscribe.
Get unlimited access. Support Worldcrunch's unique mission:
  • Exclusive coverage from the world's top sources, in English for the first time.
  • Stories from the best international journalists.
  • Insights from the widest range of perspectives, languages and countries
Already a subscriber? Log in
Writing contest - My pandemic story
THE LATEST
FOCUS
TRENDING TOPICS

Central to the tragic absurdity of this war is the question of language. Vladimir Putin has repeated that protecting ethnic Russians and the Russian-speaking populations of Ukraine was a driving motivation for his invasion.

Yet one month on, a quick look at the map shows that many of the worst-hit cities are those where Russian is the predominant language: Kharkiv, Odesa, Kherson.

Watch VideoShow less
MOST READ