No room for looser Turkish economic policy post-election - AK candidate
ANKARA (Reuters) - A Turkish parliamentary candidate tipped as a key member of the next government's economic team said on Thursday that Turkey could ill afford to loosen monetary or fiscal policy while the global economy remains fragile.
Naci Agbal, who resigned as finance ministry undersecretary in February to run as a ruling AK Party candidate in the June 7 general election, told Reuters that the next government would need to stick to existing economic policies in the immediate term.
"Global vulnerabilities persist. Data on developed and developing countries points neither to a full recovery nor a full collapse," Agbal said in an interview in Ankara.
"In such an environment, Turkey does not have the luxury to relax or abandon its cautious monetary and fiscal policies in any way. These policies must continue to be implemented decisively."
His comments may reassure some investors nervous about policy changes after the election, when widely respected Deputy Prime Minister Ali Babacan, who has anchored the economy, is due to step down.
They also suggest that like Babacan, Agbal could be a defender of the central bank's independence if he is part of the new government.
Financial markets have been unsettled by pressure on the bank from President Tayyip Erdogan and some ministers to cut interest rates despite high inflation and a weak lira currency. Erdogan's criticism of the bank, however, has eased in recent weeks as the election nears.
Agbal forecast a pick-up in growth after the vote, following a slowdown in the first quarter, based on higher investment supported by economic reforms. A revision of Turkey's 4 percent growth target this year, up from 2.9 percent in 2014, was not on the agenda.
The biggest risk for Turkey, he said, remained its current account deficit, which topped 5 percent of GDP at the end of last year. But he pointed to a rebound in the lira from record lows over the last two weeks as a positive development.
"It appears as if the exchange rate has achieved a certain stability. If we can keep it like this and if oil prices remain in line with forecasts, this will create significant space for us on the current account deficit," he said.
Babacan, in charge of the economy for much of the AK Party's 13 years in power, is prevented from standing for re-election by a three-term limit. AKP officials have privately tipped Agbal, who served as ministry undersecretary from 2009, as one of the likely key figures in the new economy team if the ruling party win the election as widely expected.
Agbal said ratings agencies would take a more positive view of Turkey after the election if it produces strong single-party government and if structural reforms are rapidly implemented.
(Writing by Daren Butler; Editing by Nick Tattersall and Susan Fenton)