Ladies and Gentlemen, Distinguished Guests, Distinguished Members of Turkish and international media,
It is our great pleasure to have the Secretary General of OECD Angel Gurria with us today.
OECD is one of the most reputable organizations carrying out very valuable studies globally, country by country and team by team and the high quality of work that OECD is providing to the world, to many countries are very much appreciated by us and by the international community.
As it has been a tradition for every G20 presidency, this year also OECD offered us to launch their report, to announce their report, which is now classically named as “Going for Growth” here in Istanbul together with us. The report concentrates on many valuable issues, including structural reforms and I would like to express my appreciation to Angel to his able, very capable team for preparing this report.
As always, I think the OECD has touched on the very important and very relevant subjects that the global economy is facing nowadays. There are so many key challenges, which we still have to face with and do something about: Persistently high unemployment, slowing productivity, high public sector budget deficit, public secured debt, still remaining fragilities in the financial sector, household balance sheets. These are all important challenges that we will continue to deal with.
But on the other hand, G20 and other platforms have helped for more collaboration, for more consultation among countries. I think since 2007–2008, G20 has emerged as the premier forum for policy consultation and coordination across the world.
G20 has a high representation power. G20 countries make up about two thirds of the world’s population, about 75% of the world’s trade and about 85% of the world GDP. Different continents are represented; there are both developed and developing countries on board. So, what we have been doing around the G20 table since the Great Recession happened, has been valuable. We were able to have a collective response and we were able to have good decisions, good outcomes. But when we look at the overall circumstances, at the global economy and global financial system; we, as the Turkish G20 Presidency, have decided to concentrate on three I’s, in a way as Turkish Presidency priorities, we have announced three I’s. And these are; Implementation, Investments and Inclusiveness.
Implementation especially is very important. Because in many countries, the problems are very well known. In many countries, how to solve those problems are also quite well known. But then it is the will and the courage to do what is necessary that will make the difference. And that melts down to Implementation. G20 countries collectively committed to about 1,000 structural reforms. They have been all reported and G20 has accumulated them and now we believe that it is going to be important to have a monitoring mechanism to see the progress. When we look at the details of those reforms, they are very good reforms and as analyzed by OECD and IMF jointly, if those reforms are actually implemented, then the global economy will have a 2% point higher growth in about 5 years’ time compared to business as usual scenario. So we can do it, if we really commit ourselves. That’s why implementation is going to be a key subject throughout this year and also more years to come.
Not only for the structural reforms committed by the countries, but also in other areas like the work of FSB, Financial Stability Board. A lot of good things have been done. A lot of work has been already completed and now implementing that is going to be very important.
The second I, Investments. Both developing countries and developed countries have actually big need for more investments. Sometimes developing countries, emerging economies are considered to be more in need of infrastructure investments. But nowadays, when we look at many advanced economies, we also find out that they also need desperately structural reforms and more infrastructure investments. For those countries, who have the fiscal space, the advice of international organizations like OECD is to use that fiscal space in a timely way and to increase the amount of investments. But of course the investments have to be chosen in a wise way. The prioritizations are very important. Sometimes a wrong investment could be simply a waste of money, waste of public resources. So how to prioritize them and how to pick the really good-return, rewarding investments is very important. But on the other hand we find out that many countries don’t actually have the fiscal space to do more when it comes to investments. And at that point, we believe that models like PPP, Public Private Partnership could be used more extensively. How to channel more private resources into public infrastructure investments is something which we need to work more on. There are already success stories around the world, good projects which we can learn from. But how can we standardize these projects to make them easier to understand for investors? How to come up with models to securitize these PPP projects? These are going to be formal agenda items throughout this year to work on. Sovereign wealth funds, pension funds, in an era of negative interest rates are also looking for good places to invest. Long term well-risk managed places to invest and infrastructure projects actually offer a huge opportunity only if we are successful at making the matchmaking. Matching good projects with good funds looking for reliable, predictable long-term and reasonable-return projects. This is something which we would like to work more throughout this year.
The third I, Inclusiveness. If growth is not an inclusive growth, it is very likely that that kind of growth is not going to be a sustainable one. We have to make sure that inclusiveness works at international level and also at intra-national level. There are many aspects of inclusivity as Mr. Secretary General already highlighted. But as the Turkish Presidency, we would like to emphasize two subjects when we talk about inclusivity. The first is small to medium sized enterprises. SMEs are very important for employment generation, entrepreneurship, innovation. In many countries, more than half of the employment is actually with SMEs. For G20, we have the B20 structure, one of the outreach groups and L20. But then, we are observing that B20 is mostly composed of large corporations and L20 is composed of labor organizations, representing the workers working for the large corporations. So we believe that we need to pay more attention to small to medium sized enterprises. And the International Chamber of Commerce have kindly accepted our offer to launch a global setup for SMEs. We have not yet put the full name, it is still being discussed but it will be probably something like ‘World SME Alliance’ or ‘World SME Assembly’, which will be like a global voice of SMEs, for SMEs to be represented in different international and multi-national platforms. That is something which we have worked a lot over the last several months and which we are very close to completion.
The second important subject under inclusivity is low-income developing countries. Yes, G20 is highly representative. Yes, G20 represents 85% of the global economy but when we look at the globe, there are about 190 more countries out there. Do we really pay enough attention to their needs, their concerns? Do we really take into account the circumstances or the influence that they are receiving from the rest of the world or the decisions taken by G20? So, during this year we are intending to put more emphasis on LIDCs, low-income developing countries, and trying to bring their problems and challenges to the G20 table and try to make sure that whatever we decide around the G20 table does have also positive effects for low-income developing countries.
So this is more or less the outline of our agenda as the Turkish Presidency of G20. As Turkey, we have also been putting a lot of emphasis on structural reforms recently. Our fiscal stance is very strong. Our budget deficit last year was only 1.3 percent of GDP. Our debt to GDP ratio is only 32%. We have a very strong financial system. All throughout the crises of 2008 and 2009, we didn’t have one single Turkish bank having any kind of problems because we have done our reforms before the crisis hit. 2006 reforms were very important to strengthen the balance sheets. And strong fiscal position, strong banking system are important pillars of strength for our overall macroeconomic and financial stability. But we also do have vulnerabilities and how to deal with them is mostly to do with structural reforms.
OECD has excellent policy suggestions for Turkey, very overlapping with the recent policy agenda that we have actually announced. We have announced under 25 headings over 1200 specific acts with deadlines attached to each act so that if we actually do all these, then in a couple of years, Turkey will be able to have higher and more sustainable growth rates and this will also help us to have more of an inclusive growth. Already, our Gini coefficient has been dropping and I think across the OECD countries, we are one of the few countries, where Gini coefficient has been dropping over the last ten years, but we need to do more. We need to do more for our education system, we need to do more for our judicial system and I think it is very important for not just for Turkey but any other country. We mostly ask three questions when we evaluate the policy framework of countries; first; ‘do the authorities know the problems? Do they understand the challenges?’ That’s question number one. And second question is; ‘do they know how to solve these problems?’ and the third question is; ‘do they have the will and the courage to do what is necessary?’ If all the three questions have a ‘yes’ answer in front of them for any country, that country would probably perform well.
So, again my sincere appreciation to OECD, to Mr. Secretary General in person, for all the good work that has been done throughout the difficult years since 2008 – 2009. OECD studies are reference studies, very high quality studies and the suggestions, proposals for countries are very valuable. We benefit a lot from them as Turkey and I’m sure that many other countries also benefit a lot and we hope that this report is going to be a report, which will be food for thought but it will be also food for growth, which we believe is going to be helpful to many countries. So, thank you again.