TURKEY’S KRIZ(A):

DETERIORATING
BALANCE OF PAYMENTS
GROUP 5
Priyank Misra 160102063
Yogesh Kr Pandey 160101134
Supriya Upadhyay 160101115
Saumya Singhal 160101094
Amiya Roy 160102014
Prashant Parmar 160101072
 1999 and early 2000
Late 2000 – Increased
- Implementation of
pressure on Turkey’s
countermeasures
BoP and currency
INTRODUCTION against inflation
TO THE CASE

Volatility in Key International

February 2001 – Accounts:
Economic crisis in • Financial account – Surplus (1993)
Turkey forced the to Deficit (1994) to Surplus (1995-
97)
devaluation of the • Current account – $1.4 billion
Turkish lira (1999) – Dramatic increase - $9.8
billion (2000)
Where in the current
account would the • Telecommunication equipment will be included as a
imported part of “Merchandise” head in Current Account, as
telecommunication Imports
equipment be listed?
Would this location • Accounted for the increase in the “Other Capital
correspond to the Receipts and Payments “ portion in Financial
increase in magnitude Account as the items were bought from Nokia and
and timings of financial Motorola on trade credit
account?
 • Trade credit for telecom equipment is a loan,
accounted for in the BoP, and not as a net direct
investment
• Political instability and uncertain future growth
Why do you think that
prospects
net direct investments
declined from $573 • Countermeasures against inflation include high interest
million in 1998 to $112 rates, among other policies, to slow the growth rate
million in 2000?
• Reduction of returns and direct investment inflows, due
to A slower growth rate in the long run
• Shift of FDI towards developing countries offering
more than natural resources, labour and markets
Why do you
• Time gap between network creation and efficient
think that capacity utilization by revenue-paying customers
TeleSim
• Overly optimistic expectations of the telecom
defaulted on its industry for monetization of customer base
payments for
• Worldwide overcapacity of telecom networks, led to
equipment price competition
imports from • Dollar-lira devaluation affected TeleSim’s payments in
Nokia and dollars, towards Nokia and Motorola
Motorola?