Gardener: We Must Maintain Discipline in the Rational Roadmap
The November regular meeting of the Istanbul Chamber of Industry (ISO) Assembly was held at the Odakule Fazıl Zobu Assembly Hall with the main agenda of “The Importance of Central Bank Policies for Our Industry, Production Life, and Financial Stability.” The meeting, which was opened by ISO Board Chairman Erdal Bahçıvan, featured guest speaker Fatih Karahan, the President of the Central Bank of the Republic of Turkey (TCMB), who provided evaluations on the agenda. The Şırnak Chamber of Commerce and Industry Board also participated in the meeting.
In his speech, Bahçıvan emphasized that the Central Bank has set a clear target to reduce inflation, which he described as “our Achilles' heel,” but inflation continues to show resilience. He stated, "The improvement in the main trend of inflation is still not at the desired level. A similar situation also applies to inflation expectations, particularly the forecasts of households and the real sector, which are at levels that severely complicate healthy pricing."
Bahçıvan continued, "The fact is that regaining the society's trust in low inflation requires a very challenging struggle. Today, we are going through a very serious and valuable process to overcome the difficulties experienced in the economy through a rational roadmap. The value of each day is significant for everyone. We must not lose discipline here. If we prematurely disrupt this treatment, this diet, based on tangible data, after having paid heavy costs and waited patiently as all segments of society, there is a risk that all our sacrifices will go to waste. We must recognize the value of our credibility, which is being rebuilt day by day with patience. The gathering of credit lost step by step over the past 1.5 years should not be taken lightly, and its value must be appreciated. We should avoid moving towards excitement-based actions that are not data-driven."
No luxury to abandon production and investment
Bahçıvan stated that the path to achieving our country’s medium- and long-term goals lies in mobilizing all elements from education to infrastructure, from tax legislation to the legal system for a qualified production life. He asserted, "Our country has no luxury to abandon production and investment, regardless of the conditions. We must focus on using our limited financial resources in the most effective way and prioritizing production, technology, digitalization, and green transformation. While there are significant deficiencies in all our industrial sectors regarding this process, there are also opportunities that can bring substantial gains in a short time. I want to emphasize that we need to expand qualified financing channels that prioritize a high value-added production ecosystem and reward technological transformation and innovation, without interrupting the ongoing balancing process in our economy."
Eight requests of industrialists from the Central Bank:
- We believe that it would be beneficial to provide rediscount credits directly through Eximbank.
- The collateral letter requirement for rediscount credits should be removed or an upper limit should be set for banks in this regard.
- The interest rates applied to rediscount credits should be lowered to make TL credits more attractive.
- We assess that it is an appropriate time to resume the provision of foreign currency-based rediscount credits, which have long been removed from the agenda.
- The restrictions applied to companies subject to independent audits regarding the usage of TL-denominated cash commercial credits, which state "not to hold foreign currency exceeding 10 million TL and not to exceed 5% of foreign assets to their total assets," should be relaxed.
- The compulsory currency conversion obligation of 30% for exporting firms should now be lifted or gradually reduced.
- Due to restrictive practices on credit usage, our industrialists may face punitive sanctions today. Although a large part of these regulations has been lifted, some still remain valid. We believe that all of these regulations should be completely abolished.
- Foreign currency-based long-term loans requested for purposes other than export are granted by banks to strong projects. In this direction, restrictions on credit growth should be relaxed for foreign currency-based long-term loans.