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May 12, 2017 www.intellinews.com I Page 4
The ruling Justice and Development Party (AKP) has historically had an uneasy relationship with Tusiad, but the targets selected in the post-coup crackdown so far suggest that the government does not intend to use the ongoing state of emergency as a pretext to go after business circles it does not get along with.
Ministers have argued that the executive presi- dency is needed to provide swifter, more efficient economic stewardship. In the referendum cam- paign they pledged to carry out numerous struc- tural reforms in production, taxes and severance pay, and to launch new financial instruments to restart the engine of vigorous economic growth.
Deputy PM Mehmet Simsek, a well respected former investment banker and finance and economy minis- ter, has repeatedly said that structural reforms would be the top priority of the government after the referendum.
However, Erdogan has had to deny speculation that there will be a cabinet reshuffle, which could affect Simsek. The question is whether Simsek, even if he keeps his post, will have the power to pursue those much-needed but long-delayed reforms.
Many analysts warn that Ankara will remain preoc- cupied with other pressing issues, such as Turkey’s troubled relations with the EU and the US, the Syrian conflict and transition to the presidential system, and won’t have much time to focus on the reforms.
S&P Global Ratings has said that legislation sup- porting the move to the executive presidency is likely to dominate the government's agenda over coming months and that, “this could delay the implementation of structural reforms to wean the economy off its dependence on foreign financing”.
It has also warned about the erosion of institu- tional independence. “Turkey's institutional set- tings are weak... In our view, this is characterised by increasingly centralised decision-making pro- cesses with weakening checks and balances and impaired transparency,” it concluded.
So far, portfolio investors seem to have been re- lieved by the referendum outcome. The lira, which last lost 17% of its value last year, has become more stable: the currency gained 2% against the greenback between April 14 and May 12 to trade around TRY3.595.
The main stock exchange index, the BIST-100, has risen around 6% over the same period to trade around record levels of 95,500. Total inflows into Turkish equi- ties have topped $1.24bn since the start of the year.
The yield on the 10-year bonds declined by 16bp to 10.70% over the period as prices rose. Central bank data recently showed that there has been an inflow of $1.74bn into Turkish government debt securities in 2017 to date.
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