Turkish finance minister says he will not fight markets

The Turkish lira has been hammered this year, losing a fifth of its value against the US dollar. (Reuters)
Updated 23 July 2018
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Turkish finance minister says he will not fight markets

  • Turkey’s economy continues its strong growth momentum

ANKARA: Turkey will not fight with markets but instead pursue a win-win relationship with them while ensuring Turkey has an effective central bank, Finance Minister Berat Albayrak was quoted as saying on Sunday.
Concerns about the central bank’s independence had intensified when President Tayyip Erdogan appointed son-in-law Albayrak as treasury and finance minister, boosting expectations that the president — a self-described “enemy of interest rates” — would look to exercise greater influence over monetary policy.
The Turkish lira has been hammered this year, losing a fifth of its value against the US dollar, on concerns about the central bank’s ability to rein in double-digit inflation, while Erdogan has repeatedly called for lower interest rates.
Albayrak, speaking to reporters on a flight to Argentina for a G20 summit, also said the government would not compromise budget discipline and that there would be a noticeable improvement in inflation, broadcaster NTV reported.
“We will not compromise budget discipline and a program that is down to earth will be prepared,” Albayrak was quoted as saying.
“We aim for an effective central bank. The central bank sees and builds the fiscal life in a correct way. Turkey will never again be this attractive for foreign investors.”
The government’s medium-term program (OVP) will also change into a “strong and solid” five-year strategy, Albayrak said.
With Erdogan having merged the Treasury and the Finance Ministry, Albayrak’s appointment effectively saw him replace both Mehmet Simsek and Naci Agbal in a cabinet that now has no obvious investor-friendly ministers.
Albayrak’s comments, therefore, are closely watched by investors for clues on whether he will seek to calm financial markets by adopting a more orthodox approach to monetary policy or reiterate Erdogan’s views that high interest rates stoke inflation.
Following his appointment, Albayrak had said the central bank is independent and will do whatever economic realities and market conditions necessitate.
Earlier on Sunday, state media quoted Albayrak as saying that Turkey was continuing its strong economic growth trend and that the foundations of its economy were strong.
The state-run Anadolu news agency quoted Albayrak as saying that the government aimed to maintain prudent fiscal policies and healthy credit growth, carrying out structural reforms and strengthening Turkey’s monetary policy framework.
“Turkey’s economy continues its strong growth momentum. Our economic foundations are going to be strong and our outlook is promising,” Albayrak said.
The central bank’s monetary policy committee, which has raised rates by 500 basis points since April in an effort to put a floor under the currency, will meet on July 24.
On the sidelines of the G20 summit in Buenos Aires, Albayrak said on Twitter that he had met with his US, Chinese, German, Brazilian, South Korean, French and Indonesian
counterparts.


US says conserving oil is no longer an economic imperative

Updated 19 August 2018
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US says conserving oil is no longer an economic imperative

  • Fears of oil scarcity no longer driver of US energy policy
  • Surging shale production brings energy abundance

WASHINGTON: Conserving oil is no longer an economic imperative for the US, the Trump administration declares in a major new policy statement that threatens to undermine decades of government campaigns for gas-thrifty cars and other conservation programs.
The position was outlined in a memo released last month in support of the administration’s proposal to relax fuel mileage standards. The government released the memo online this month without fanfare.
Growth of natural gas and other alternatives to petroleum has reduced the need for imported oil, which “in turn affects the need of the nation to conserve energy,” the Energy Department said. It also cites the now decade-old fracking revolution that has unlocked US shale oil reserves, giving “the United States more flexibility than in the past to use our oil resources with less concern.”
With the memo, the administration is formally challenging old justifications for conservation — even congressionally prescribed ones, as with the mileage standards. The memo made no mention of climate change. Transportation is the single largest source of climate-changing emissions.
President Donald Trump has questioned the existence of climate change, embraced the notion of “energy dominance” as a national goal, and called for easing what he calls burdensome regulation of oil, gas and coal, including repealing the Obama Clean Power Plan.
Despite the increased oil supplies, the administration continues to believe in the need to “use energy wisely,” the Energy Department said, without elaboration. Department spokesmen did not respond Friday to questions about that statement.
Reaction was quick.
“It’s like saying, ‘I’m a big old fat guy, and food prices have dropped — it’s time to start eating again,’” said Tom Kloza, longtime oil analyst with the Maryland-based Oil Price Information Service.
“If you look at it from the other end, if you do believe that fossil fuels do some sort of damage to the atmosphere ... you come up with a different viewpoint,” Kloza said. “There’s a downside to living large.”
Climate change is a “clear and present and increasing danger,” said Sean Donahue, a lawyer for the Environmental Defense Fund.
In a big way, the Energy Department statement just acknowledges the world’s vastly changed reality when it comes to oil.
Just 10 years ago, in summer 2008, oil prices were peaking at $147 a barrel and pummeling the global economy. OPEC was enjoying a massive transfer of wealth, from countries dependent on imported oil. Prices now are about $65.
Today, the US is vying with Russia for the title of top world oil producer. US oil production hit an all-time high this summer, aided by the technological leaps of horizontal drilling and hydraulic fracturing.
How much the US economy is hooked up to the gas pump, and vice versa, plays into any number of policy considerations, not just economic or environmental ones, but military and geopolitical ones, said John Graham, a former official in the George W. Bush administration, now dean of the School of Public and Environmental Affairs at Indiana University.
“Our ability to play that role as a leader in the world is stronger when we are the strongest producer of oil and gas,” Graham said. “But there are still reasons to want to reduce the amount we consume.”
Current administration proposals include one that would freeze mileage standards for cars and light trucks after 2020, instead of continuing to make them tougher.
The proposal eventually would increase US oil consumption by 500,000 barrels a day, the administration says. While Trump officials say the freeze would improve highway safety, documents released this month showed senior Environmental Protection Agency staffers calculate the administration’s move would actually increase highway deaths.
“American businesses, consumers and our environment are all the losers under his plan,” said Sen. Tom Carper, a Delaware Democrat. “The only clear winner is the oil industry. It’s not hard to see whose side President Trump is on.”
Administration support has been tepid to null on some other long-running government programs for alternatives to gas-powered cars.
Bill Wehrum, assistant administration of the EPA’s Office of Air and Radiation, spoke dismissively of electric cars — a young industry supported financially by the federal government and many states — this month in a call with reporters announcing the mileage freeze proposal.
“People just don’t want to buy them,” the EPA official said.
Oil and gas interests are campaigning for changes in government conservation efforts on mileage standards, biofuels and electric cars.
In June, for instance, the American Petroleum Institute and other industries wrote eight governors, promoting the dominance of the internal-combustion engine and questioning their states’ incentives to consumers for electric cars.
Surging US and gas production has brought on “energy security and abundance,” Frank Macchiarola, a group director of the American Petroleum Institute trade association, told reporters this week, in a telephone call dedicated to urging scrapping or overhauling of one US program for biofuels.
Fears of oil scarcity used to be a driver of US energy policy, Macchiarola said.
Thanks partly to increased production, “that pillar has really been rendered essentially moot,” he said.