Call by IMF on Turkey for Central Bank’s Independence

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As the markets met with alarm the legal changes made in administration of Central Bank of the Turkish Republic (TCMB), another warning came from IMF Spokesperson Gerry Tice during a press conference held yesterday (July 12).

Gice called on Turkey to ensure independence of its Central Bank.

Question and answer section regarding Turkey and commercial crisis between the US and China is as follows:

Question: Hi. Two questions. One of the latest amount of tariffs. And a second one on Turkey. First of all, does the Fund have any updated position on the tariffs that have been announced, this kind of evolving trade conflict between the U.S. and China? I mean, we are up to potentially 250 billion dollars in tariffs on Chinese imports which is about half of all imports into the U.S. To what extent is the Fund concerned about this development?

Mr. Rice: It is something we are looking at closely and I want to point you, Andrew, to this series of reports that are coming over the next 10 days or so which will cover the trade and tariff issue collectively in a bit more detail and granularity and I think will, you know, help to respond to the question that you have. So we have got the WEO update, the G-20 surveillance note and the external sector report and I think there will be a lot of information in terms of our most updated assessment of where we are on that issue.

For today, you know, again I just reiterate what the Fund has been saying, Madame Lagarde has said it many times that, you know, we encourage everyone to work constructively, try and reduce trade barriers and resolve the disagreements without resort to exceptional measures. As Madame Lagarde has said, that nobody wins in a trade war.

So again, I would ask that you hold your questioning just a few more days and you will hear from Maury Obstfeld and others on this in the coming days.

Question: Sure. And on Turkey, question specifically about the legislative changes they made to the selection process for the central bank governor. I think it gives the president more power to select the governor. You know, in the past the Fund has expressed concern about politicization and the independence of the central bank. Any updated view on their position on that?

Mr. Rice: Well, I think overall on Turkey, what I would say is that in light of the recent market volatility the new administration will need to demonstrate a commitment to sound economic policies to promote macroeconomic stability and reduce imbalances while ensuring full operational independent to the central bank to pursue its mandate of securing price stability. (PT/TK)