Deputy Prime Minister Mehmet Şimşek told Anadolu Agency (AA) that the Turkish economy has recently proved its durability in the face of a series of shocks both inside and outside the country. The minister also that announced a risk monitoring firm will be founded with a view of managing companies' foreign currency obligations.
Şimşek stressed that Turkey is working on additional measures to increase its resilience to external shocks and exchange rate volatility as uncertainties in the global economy continue, adding that they will also evaluate the studies on the real sector's foreign currency borrowing in this regard.
Though indicating that companies' short-term foreign exchange position is fairly balanced according to a variety of sources, Şimşek said, "It is also true that there is no detailed data to grasp the whole picture. Therefore, we see that the comments on the foreign exchange debt of the real sector sometimes negatively affect risk perceptions of Turkey in periods of fluctuation in the exchange rate."
Suggesting that creating a framework where the foreign exchange position and foreign exchange cash flows can be regularly monitored on a firm basis is useful in many respects, such as in risk management, Şimşek noted that the framework of incentive and macro-prudential regulation in this way needs to be reconsidered in order to contribute to prudential borrowing and risk management.
Şimşek highlighted that the monitoring of the real sector foreign exchange debt in a more comprehensive way and at a reasonable frequency is of importance for financial and price stability, and that a functional platform has been recently created on the subject with the contributions of the relevant stakeholders under the coordination of the Financial Stability Committee.
Data to be monitored with the new modelStating that the initial aim is to ensure companies' foreign exchange obligations are united in a framework of healthy and sustainable monitoring and effective macroeconomic regulation, Şimşek said the work that has been carried out so far has been accomplished in contact with the real sector and banks in coordination of the Central Bank of Turkey (CBRT) under the Committee.
Şimşek also noted that they have been working on a "systemic risk data follow-up model" in order to establish healthy monitoring of the currency risk of the real sector and determine correct policies.
Pointing out that detailed data on 2,000 companies constituting 83 percent of total foreign debts will be collected in the first stage, Şimşek said, "Thus, we will be able to follow both the stock foreign exchange position and short-term foreign currency cash flow of our firms. Information about the natural and financial protection of our firms will also be collected through the created data set."
Şimşek said that the work on the content and process of the data has reached its final phase and that the final report will be presented by the Financial Stability Committee. "Upon the completion of the data phase, we plan to move on to the stage of incentive and macro-prudential regulation, if necessary, by analyzing the information from our firms," the minister said, stressing that they aim to help manage their firms' risk more effectively and encourage them to carry out prudential borrowing and effective risk management, and establish a healthy and long-lasting framework by raising awareness among related stakeholders on this issue.
As of December 2016, the long-term outstanding loans received from abroad by the private sector increased by $8.3 billion, reaching $202.7 billion when compared to the end of the previous year. The short-term loan, excluding commercial loans, decreased by $6.1 billion and stood around $14.3 billion.
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