Turkey needs bigger economic package against COVID-19, economist says

Turkey’s government needs to switch from short-term, reactive steps to deal with the economic impact of the coronavirus to a comprehensive package of carefully considered measures, according to Ali Ağaoğlu, one of the country’s top economists and commentators.

“If possible, we need to see and evaluate the bigger picture, and work on and present a bigger package of steps,” Ağaoğlu said in an interview with Dünya newspaper published on Friday.

“Rather than react to each problem that arises, we need to think about today’s problems, tomorrow’s problems and what will happen in three days or three weeks' time, and how we must deal with that now.”  

Turkey’s government announced 100 billion liras ($15 billion) of measures last month to help soften the impact of the spread of COVID-19 on the economy. It has announced several additional steps since then, and the central bank has cut interest rates and injected liquidity into financial markets to help support economic activity and lending.

Ağaoğlu praised the central bank for taking the steps, but questioned other government measures, including efforts to boost lending by banks via the country’s Credit Guarantee Fund. He said the government may have doubled such guarantees this week, but it was not clear how banks would fund the extra lending, characterising it as an “important problem”.