The Banking Law that was enacted by Parliament in the summer of 1999, and the amendments made during the last month, were aimed at giving the banking system the necessary efficiency and soundness. In conclusion, let me summarise recent history. We have been working on this program for the past two years. Its technical excellence accurately reflects well the effort that has gone into it. I do not hesitate to say that the program is “comprehensive”, “strong”, “ambitious”, “bold” and “imaginative”, and most of all “achievable”. The willingness of the political authorities to execute this program is clear from the way they have taken the necessary but politically difficult economic decisions: quickly, without hesitation or second thoughts. The IMF and the World Bank have strongly endorsed the program, the former by approving for Turkey a three-year standby arrangement, and the latter by extending project credit. The prospect of membership negotiations with the European Union pursuant to the Helsinki decision provides an additional strong incentive to implement the program forcefully. There is a strong autonomous ownership of the program. The Government, the Parliament, policymakers, and the social partners all understand the great rewards, particularly in terms of reduced interest costs and stable growth, that will follow the program’s successful implementation. The markets’ reactions to the program have also been very positive. Interest rate declined from 100% last October to the 30s recently.
Mr Erçel reviews the monetary side of Turkey’s ambitious three-year disinflation program  Speech given by Mr Gazi Erçel, Governor of the Central Bank of Turkey, at the Merchant Taylor’s Hall, in London on 25 January 2000. *  *  *  Turkey’s disinflation program: what we are doing and why Starting this year, Turkey has embarked on an ambitious three-year program to disinflate its economy. I call it ambitious because Turkey has suffered from a high and persistent inflation for the past quarter of a century, and any program that hopes to correct such a long-standing problem needs to be ambitious. I will begin by reviewing this new program, especially the monetary side of it. But first I will give you some snapshots, from the past, of the Turkish economy, which I think will give a clear idea why this was the right time to take action. The history of Turkish inflation shows that for the last quarter century inflation has been gradually increasing, never falling below two digits. The average inflation rate for the whole period was 55%. During the last decade inflation has averaged 72%. Reflecting the uncertainties inflicted on the economy by this chronic inflation, growth has been volatile and at the low end of the range of comparable emerging market economies. Turkey’s average growth rate over the last two decades was 4.2%. Average growth for the emerging markets of Asia, where inflation is not a problem, has been much higher.