Turkish economy needs normalization before incentives

We have learnt that Prime Minister Binali Yıldırım will announce the "attraction centers" program, including new economic incentives, this week.

Although we do not know its scope, in a period like this, we must not expect to get much from such incentives. Let's have a look at the last two years. The ruling Justice and Development Party (AKP) continuously announced new incentives after elections when the party could not come to power by itself.

These incentives skyrocketed ahead of the referendum. We can say roughly that only "the incentive measures through which money was put in people's pockets" gave results, but the longer term investment incentives were not that successful. 

Ahead of the referendum, the employment incentive also gave good results so they do not belong to the two groups I mentioned above. It was a success as the political authority said, "I will look at each company one by one to see how many workers they hire." Therefore, it may not be right to call this an economic incentive.

In my opinion, the most effective incentive was to offer the treasury guarantee for loans originated from the Credit Guarantee Fund (KGF) and to give a boost to their limits to a vast scale. It is obvious that the increase in these loans was the most effective tool in surging the economic growth. Besides, despite being late, the Central Bank's efforts to prevent steep fluctuations in foreign exchange rates and to increase the rates for the money it offers to the market have also been effective, even though we cannot call them an incentive. Just as some government members have accepted, the blast in KGF loans ahead of the referendum buoyed many troubled small and medium-sized enterprises up by pouring hot money into them. These loans had a...