Treasury and Finance Minister Mehmet Şimşek announced that institutions are working in coordination on the troubled funds and that steps are being taken to make payments to investors as soon as possible and at the highest level. Şimşek stated that the Ministry of Justice is conducting the legal process and said that the economy remains resilient despite global conditions and the war. As inflation declines, growth is approximately 2 times that of trading partners; the current account deficit is 2.6% of national income. The gross external financing need is 16% of GSYH, while external debt is 32%; the long-term averages are 20% and 44.5%. The budget deficit is approximately 3%, while public debt is 22% of GSYH, equal to half and one-third, respectively, of the averages for developing countries. He said the measures would strengthen capital markets.
Why it matters
The development shows that the process concerning the claims of troubled fund investors is not limited to financial institutions and that judicial authorities are also involved. Interinstitutional cooperation brings to the fore questions about which mechanism will be used to make the payments and how investors’ rights will be protected. While the announced macroeconomic indicators show that the government is assessing this process within a broader framework of economic resilience, they also raise the issue of confidence in capital markets. However, details regarding the payment schedule, scope and method to be implemented, which are critical for investors, have not yet been clarified; therefore, the practical outcome of the statement depends on the legal and institutional steps underway becoming concrete.