The IMF & the World Bank Spring Meetings

the new Economy Minister of Spain. Mr Escolano, thank you for joining us. There's a lot that we want to talk about. We want to talk about trade ters reforms. But first of all, what was the biggest surprise in the job. So you've been in the job, you've always followed the economy. Is there something that surprised you. Well, I've been as a economic Minister of Spain for just one month, very veteran. Well it's been it's still brand new in the position. But I'm being surprised by many things.

I mean the intensity of the European debate. I just joined a train which is in full speed. We have, you know, prospects who find important agreements. I mean the much of June, the debate in Europe is at full speed. But then I have in my own ministry in the area also responsibility and many interesting things like science, which is an important and research, which is an important part of the policies of the government. And this is of

course extremely interesting. The discussion of the budget of Spain happened to coincide exactly with the first weeks of my stats as the ministry, so the things as you mentioned, and all of them coinside at the same time. So it's been a busy time, but a very important time for Spain and for Europe. Do you find there's commonality in the G twenty Are a lot of G twenty ministers rallying against people asking for the end of globalization? Well, I think that there is a broad consensus. If you

ask me, there's a full consensus. Maybe I wouldn't go that far, but there's a broad consensus on many of the issues that have been discussed. First of all, protection is m I think that there is very very wide consensus among our colleagues that we have to avoid escallation in the matters of protectionism. There is a perception that via sunny shining in the global economy, but there are

underlyingable and abilities, and we have to be aware. In many of the areas we see normalization of monetary policies, including in Europe, of course, and we have to be prepared for that. We still have an economy which is full of debt. So I would say that these basic elements are part of the consensus that I find when

discussing with my colleagues. May I say that there is also consensus among my colleagues to see that the Spanish economy is doing well, if you permit me, that is also a part that frankly, I can tell that all my colleagues I wanted to go to in this atrium six seven, eight years ago, friends and acquire and I noticed the pain to swear the crisis, and what has been noted is Spain led the way to greater stability.

As you look back five years, six years, seven years, what we would call the pixie dust, What was the pixie dust of Spain that allowed for you to recover so promptly. Well, I think they've been uh, not just when reason, but few reasons. Uh. If you want to put a summary to what happened in Spain. I would say that the main economic reforms that we're undertaken in

two thousand and ten are which are depending the covering recovery. Particularly, we had a change in the law regarding the budget and that that creates a path for physical consolidation, which has been actually important. Then we have a banking reform. We have a very intense banking reform. The banking landscape has been completely transformed in Spain as opposed to the last six years when you were mentioning. And finally we have labor market reform. So you put the three together

that has called for this transformation. Talk about europe valuations and we talk about Germany, the Netherlands, maybe we talk about countries struggling firm work than a successful Spain. Do you, ever you had an octomo euro valuation, I would not. I would not comment on the eurovaluation. Next month you will,

but I will tell you. But I will tell you is that despite the evaluation of the Euro, the Spanish export, particularly Spanish sport, outperforming not only the European or the euro Area average of export, but the world trade as such. So we are gaining actually wait, Spain is gaining ground in the world trade and this is extremely part of

the recovery. Let me say, if you compare the Spanish economy today when west was six seven years ago, there has been a reduction of eight points of GDP of construction. We used to be a country with that had that this real estate boom and then a lot of construction, a lot of jobs link with construction. This has disappeared essentially and now this eight ten points are exports. So we have moved from this non tradeable economy to a tradeable economy. And this is the underpinning the present the

Spanish budget bill. It is difficult to get past next week well and then not actually this week. It is a bit more of time. But let me say that the main features of the Spanish budget are very important. First of all, reduction in deficit. We are really have an ambitious target for reduction deficit. H the consolidation of the growth. We will be growing more than the European

average for the fort in a row. Among the largest European economy in Spain is the leading performer this year will be as a mention for the four year in a row. And then there is socialistic particular regard intentions there have been some social groups that have been left behind because of the economic crisis, and we try to compete to that. So in political terms, I think there's no reason for the rest of the political not to support.

We are still confident that this agreement with Minister were Plumberg surveillance from London and from New York, wonderful coverage of the crisis in Barcelona. The domestic politics of Spain. Give us an update and how the nation is coming together after the challenges that you saw in person. Well, the nation assumation is coming together around the constitution and are around the constitutional order. Spain is a fully modern and advanced democracy. Around are very i would say respected

in the constitution. The polls, the latest polls, including from the Catalan government itself, showed that the support from independence is diminishing, and it's diminishing quite fast. Actually, we see that in terms of the economic situation and the business situation, the financial situation. Actually we'll see a clear recovery in Catalonia after difficult months at the end of the year, and we are calling for the Catalan government to be formed, to have a majority in parliament and to go back

to normal relations with the national government. I think that this is an extremely important economic area in Spain. It's around twenty of the Spanish GDP and we want normal relations to get restable. It's as responsible with the new Catalan government so well, we want this to happen. And let me say that with the current existing data, we

see that the business situation in Catalonia is recovering pretty much. Minister, if we talk about European integration, so Marianna Avoy like zero bounds, he likes the European budget and a finance minister, what will Germany likely say or you know, push, push through and watch the priorities be Our priorities is essentially the completion of the missing parts of the economic and monetary union. We have made a tremendous advance in the

last four years, probably more than people actually realize. We have a single supervisory system, we have a single bank resolution system, but there's still some missing parts. Namely, we need a common the possible guaranty scheme. I mean, the Americans have this for seventy eighty years, but we lack. We still have national systems. We need a backstop for the resolution system to really function in times of stress.

These are missing parts. So these are priorities. We think that the Spanish government and we will publish next week a paper on that we need a kind of physical stabilization mechanism that we think will complement the monetary policy, particularly in times of shocks and times of prise. As we get it in our lifetime, we'll we even get a banking union. I love you. It must be at the end of them cynical. As you may see, I'm a Europhile. We are used to have step by step process.

We used to have difficulties. We need to have a quarreling between ourselves, arguing between ourselves. At the end of the day, sometimes at the very latest moment, agreements are found. This is the typical European way. So in this sense, I think that we are optimistic. We are clearly pushing for European integration. You will find in Spain one of

the countries which is pushing more for your pintanzization. Why because our population is clearly in favor of the more you in integration, and we think that we benefit from this. In the historical sense, this maybe are if your remit, but I'm going to take a risk here because you've

only been doing this for one month. There's going to be a new e c V president here in a year and a half or so, and there's a raging debate that we observe in London and New York about well, should it be German, should it be this, or should it be that? What does Spain feel about the leadership of the e c B and US Spain could fit

into that equation. What I will tell you is that soft June July, the CP will have a brand new vice president from Spain, which is my predecessor, which is an extremely talented and respected economies and he would make an impact. He will leave his mark in the working of the e CP, so he'll be from rushould be able to move right up. He will leave his mark and his talents at the service of the works of the CB. Apart from that, if you expect me to comment, I will not at MR on Bankia it has to

be fully privatized by two thousand nineteen. Will that that deadline stick Bank will be fully privatized. We don't think that there is any role for the government to be in the in all been banking, and that's clear the government policy. Second, we want to be sure that the money and the support that was given by the taxpayers to the rescue, let's say, of the depositors of the banks are to the maximum extent possible recovery. So these

are the two pillars of our policy. In the frame order, these two pillars we will advance, but in mind that banking will be privatized, because we do not see any role of public own banks. Minister, thank you so much for joining for our net World Bank special. That was the Spanish Economy Minister. He's Roman Escolano. David Lipton is the American representative. He has four titles here, but usually

to Medroow McCard. He's the important number two. Many of you will know John Lipsky of another time in play, serving in the same important dude, He's Ductr Lifton. Wonderful to see you again. What do you do every day for Madame Leguarde? What's the real job of the first deputy director to manage the staff and the work of the staff and make sure that everybody is uh doing what they've got to be doing. Thinking about the policy,

the strategy and the crisis situations. We give us the stereotype of one PhD making the Green Book, the Blue Book, the Fiscal Book. Give us an example of who that PhD is. It's giving you your brain power. You know, we've got people from all around the world. They're the very well educated PhD economists. But what separates them from others is we are clinical economics. We're gonna go economists, meaning you have to practice what you preach. It has to not just work in theory, it has to work

in practice. And these are people who've been doing this around the world, in real world situations, dealing with the actual problems, and the leaders who have to bring about the changes. The zeitgeist of the nineteen fifties and nineteen sixties I m F was maybe over week, over a quarter, maybe out six months. The zeitgeist now is one or two days. How do you see here within these spring media, Well, we have to be agile. What everyone is saying this week,

one way or another is very simple. Things are good, but they're getting risky. And our message, of course, is in that kind of setting, while things are still good, it's time to try to prolong this recovery in ways that will be sustainable and prepare for those risks, try to lessen the risks and be in a better position to deal with them if they materialize. You have a beautiful social media effort. I can tell you that in the bars now, maybe Arsenal football with the British continue

today will be different. But in the bars of the I M F of cocktails, there is one video people are looking at, and it's the debt video of all the nations with improving debt structure, and there's one nation with a red bar, and it's the United States of America. Is the United States of America's saving for a rainy day? Well, look, there are debt issues all around the world. The key number you're referring to is a hundred and sixty four trillion.

That's a big number. That's more than twice global GDP. So there are a range of countries around the world that will not have the buffers, will not have the space and room to maneuver if something goes wrong, and so they should be doing something about that, trying to rebuild space. The United States is in that category. It's important and we've been saying this for years that the US soon reduces the budget deficit and tries to get the debt to GDP ratio to come down because you

never know what will happen tomorrow. The arch theory for all Americans and frankly for many in the advanced economy is growth will solve everything within your forecast in the blue book, your World Economic Outlook. Thank you, Marie Sobsfeld. Can you yank it over to the brown book the fiscal space and say the growths will be there for

every unique story, include in the United States. Well, we would like to see people countries, all of our member countries try to take steps to improve growth in the medium term, because this is a cycle and you have to look over the crest of the hill and see what's going to come. And we believe that actually potential growth will be somewhat lower in the future, uh than it's been in the past. So they will have to be affirmative steps through infrastructure and structural reforms to improve

the growth prospects. But I would say that there are there are there are new wild cards on the horizons. I think example, well, the three subjects non traditional subjects in a sense, that are on everyone's minds this week are the three t s, Trade, technology, and trust. Trade is a semi traditional subject because it used to be a big deal. But everyone's been in agreement for years that there should be liberal trade. We need to on trade.

We need to pivot from where we are. Two country is that have gained from globalization and know their future is linked to globalization, but are now big enough to matter. They need to be thinking about opening up their own economies. And at the same time, the United States needs to be letting go of uh unilateral pressures to achieve its goals here at the here, at these meetings, people are really now talking about all together trying to find ways

to shift to more market access, more competition. Countries are now strong enough to open themselves up to competition. They will all gain the template. This is so important, David. The template here is a multilateral effort in this idea of trust butter stuff against an America with the president who is to be kind bilateral, maybe unilateral, or maybe my way or the highway. How do you draw the present administration into a more success us full trust relationship.

I think that are politically the breakdown and trust is very is very broad in the United States, in Europe. In many places, trust is um between international partners. Trust in national institutions is diminished. And I think that's a problem. The way it has to work is that people cooperate and show that cooperation leads to gains, and then you start to rebuild a sense that there is something to

be achieved together. I was talking to Jason Furman about the wonderful economist Robert Barrow and the trust over time are we destroying within your study of trust at the IMF, I did a panel on this, and Dr Lipton will do a panel on this as well. Do large deficits, do burgeoning debt over the long term, they must destroy institutional and societal trust, which I think the globalization and the dislocation, the financial crisis, technology, all of the as

things have led to an erosion of trust. People don't believe that institutions government has taken care of them, and so there's globalization. Uh, you know, we've been saying this for years. Globalization has to be managed in a way that it is going to be durable. You have to deal with the dislocations that come from globalization. And I think, as you're saying, you have to make sure that you maintain stability. Because the financial crisis was the biggest destroyer

of trust. We've not really we've recovered in the sense that people trust financial institutions because we did a huge reform to make banks safe again. But more broadly, it's very important to maintain uh stability of public finances in

order to that people will trust in their governments. Within this is China, and within this is a trade This has been a wonderful discussion centered on the United States, but there are changes in the Pacific room, their changes in China, and maybe the dialogue into May is about t p P. The President swings back and forth. Who knows where the President will be on t PP review. The I m F stands on the efficacy the benefits that all can see from TPP, even the China potentially

excluded from it. I mean at the root is the proposition that we still can gain from more interconnectedness and that that's key to the future of the of the Asia Pacific region UM and I think that that there's there's certainly having high standard trade agreements where there can be a deepening of links and countries can open themselves up to competition and everyone gains from competition. It's a positive.

Some game is important. It's been a shame that the United States hasn't found yet found a way to participate in that, because the United States could be a real driver of growth. David lefton thank you for this spirited conversation that they of course with the International Monetary Fund. On behalf of Tom and I am now a spokesman.

We say good morning to you for the second day of coverage from the world back I m F meetings here in Washington, d C. An interview that we've both been looking forward to all week is speaking to the e Commissioner for Monetary and Physical Affairs here is Mr piamos Covic and joins US now Commissioner. When you look at what Europe wants, a lot of countries want more integration.

Others want to maybe toned down the integration. What are the Germans as are they getting a little bit more cold feet than maybe six months ago on banking on capital markets, union and getting closer together? Well, it took time after the elections for the German government to be formed. It has been done recently. The country is may be more divided than it used to be. It has its

own cultural stability. The political lens is quite difficult to strike and this can explain why I wouldn't say they're reluctant,

but they are careful. But I think that they need to understand that the situation Europe is as well positive for the economy and complex politically, and that they need to take their responsibility as economic leaders and to show that well, their tradition of risk reduction must be respected, but that they also need to show solidarity, and that means also taking Mr mccon's and the Commission's hand in order to reinforce the Economic and Monetary Union to have

a Eurozone which is stronger for all its members, and also to recreate the tools to converge for our economies to reduce inequalities A commissioner, can any good come of of the trade ward a possible trade war between the U S and China, And I'm not talking about economically, but we've heard in the last eighteen months twenty four months that European countries lacked commonality. Now they have something

to try and avoid together up. You cannot define yourself against another one, but we must not be divided by that. There is no French, German, Italian interesting that as far as trade is concerned, we are all together. The Commission is responsible for negotiating on trade. My colleague Manstrom is in charge of that. I will meet Phil Burass in a few minutes. I met yesterday Stephen Millucin. I saw people in the White House, and I think that we

must get down on the tone on that trade. War is as every war, it's bad, nothing, nobody wins, it's lose lose, and we need to find protectionism. Here. We are in the temple of multilateralism. Will be in a gwenty meeting in a few seconds, and there we must say protection is m is not a solution, it is a problem, and we must do that all together. But that's not enough for Europe. For Europe, we really need

to integrate more where it's necessary, not everywhere. I'm not asking for a federal Europe, but I'm saying there are items such as migration, trade that you mentioned, monetary union on which we must make decisive progress in order to have more investment, to have a better and stronger growth for the future. Secretary Molutions also giving you the gift of a trillion dollar deficit, and it seems like chronic trillion dollar American deficits. How does that affect your your

inner recovery? And yet the story of this IMF as a US it has a tone of fiscal irresponsibility. How does that affect era well? Without short term effects, make pro commically long term effects that we cannot really falsey, and there are political effects. For the short term effects, they are positive since the American growth is picking up, and with a booming American economy, it's good for the rest of the world because we are partners a lies, we exchange together. There is no trade war for the

time being, so that's good for the medium term. As always, when you've got to high debt and a high deficit, you need to watch that carefully to avoid imbalances. And this is not only for Europe, this is worldwide. Politically, our situation is not the same. We have a high debt. We don't have the privilege of having the world currency, which is the dollar, so we must still be careful about our public and private debt. And as Mara Lagal said,

debt is still the problem for the future. The two main risks for growth, which is now very solid all over the world are on the one hand, protectionism and trade attentions, and on the other hand, debt and our pop culture in Europe must not change. We must reduce debts because without question, without that, we cannot finance our public It's it easier to actually sell austerity to the Europeans than it is to the US. As a political

ewer politician before do we talk about it differently? And this was a point town that you today about austerity was I was not a politician. I'm still a political appointee. Being a commissioner is being a political appointee. Uh. And so I think about that politically. I never was in favor of austerity. Austerity is when you become poor and you cannot develop public services, you cannot invest. You need

to be serious, and that's somehow different. That means that you need to reduce your debt, you need to reduce your deficits. Our rules are there for that, but you can also apply these rules with flexibility. And that's what we've done. We We never punished or or made constraints to one of our member states need a Portugal, need to Spain, neither Italy, neither France. And this was positive because at the same time they reduced that debt. The

average deficit per year is under one percent in Europe. Uh. And that is getting down and we did that without Austere. That's the same case with Greece. I hope that now in a few moments will have grease out of its program because well, being serious must not damage growth. And that's that balance is the one we are looking for. You mentioned here at the I m F, in this beautiful atrium, the temple of multilateralism great four blocks down

is a temple of my way or the highway. How does Europe adapt to President Trump in his claim of a bilateral discussion which everyone agrees is my way or the highway? Do you wait out the president of the United States? Or do you sense a structural change in American negotiations with its allies. That's the least we can say. The change with President Trump and his team is huge.

Uh and well, when the words I pronounced multilateralism, refusal of protectionism, fighting climate change, it's not really in the vocabulary and in the culture of this administration. So we know that we need to to defend our own values. I don't mean against Trump. Europe cannot be built against Trump, but for our own sake. But at the same time, we have to negotiate, We have to discuss with the administration. Here I meet everybody and we are trying to establish

with them the best possible discussion climate. But longer term, could this actually hurt growth? And I'm not talking about US growth. I'm talking about US growth and world growth and therefore European growth. I said, there is short term effect which is positive, and medium term effects have to be certainly ablibrated. First, we need to avoid the fact that at one moment the economy seems to be overeated.

And the second thing is protectionism is really a pain for the economy for various reasons, uh for itself, but also for the climate, for what the message it sends to markets who don't like this, for the risk of voluntiny. No, I'm quite sure. Here in Washington, I told you that we are different from the Trump administration by all means, but at the same time we respect them the legitimate here they've been elected and they were in the country.

And so I think the messages we are trying to define together and again I met a few of them, are that we need to avoid that trade war, that finally we need to refuse protectionism, That we need to defend free trade, even an organized free trade. We need certain need to resolve some problems. The over capacity is still in China our problem, but we need to resolve them together. But in twenty seconds, so you're saying those U S officials told you that actually they were ready

to ratch it down the rhetoric. I wouldn't say that. I'm not a spokesman, but I feel that the climate is a climate of exchange of use, not of imposing views, neither of confronting views. And that's true dialogue, dialogue between different people thinking differently, that we will find a way. Almost. Thank you so much. Yes, we are here. It's stay two of our coverage and I am delighted to be joined by the French finance minister. He is Mr and he joins us now to talk about reforms that tariffs.

Trade minister, thank you for giving a little bit of your time to Bloomberg. How word are you that a trade tensions escalate into trade war. I'm rorried because I think that there is a risk of having a tad war between the United States and China, between the United States and the rest of the world, and I really think that we should do our best to avoid that tad war, which would lead to a less growth, lesser

employment and more job political difficulties. But in the more immediate term, it's about also convincing the US so not to impose terrors on Still for the moment, we cannot accept France and Europe to be hit by new terrorists coming from the United States. And what we really want is a full and permanent exemptions for the EU of

the new American terrorists. We are allies and we cannot understand that kind of policy which might jeopardize growth and private companies, either in France or in other Upan states. So we are waiting. I want to be very clear on that we are waiting for a full and permanent exemptions from the American terrifs on Europe. Do you think that you will get some kind of indication that the US will be willing to grant you that today? I hope. So.

I've been very clear with Steven Minuchine. We have a very good relationship, and I think that it allows us to have very clear and very frank discussion on that question of trade. I will have also important meetings on Monday in Washington during the state visit of McCool to the United States with Bilbo House and with Mr Yser, and I hope that they will understand that we are allied,

the United States and France. The United States and Upian countries are allied, and we cannot understand that between allies there are such trade coming from Newtais on steel an aluminium. Would that be the main message also from President Loco when it comes to Washington next week or will there

be also talk about, you know, digital technologies. Says that will be other topics, of course, but that question of trade will be really one of the important questions that will be raised during the state visit of McCoo to the United States. United States, and I want to see the opportunity although G twenty and just seven meetings here in Washington to explain the pot called position of France

and of all Upan countries. We are allied, we want at full and permanent exemption and we do not want to run the risk of having decisions coming from one of our closest allies, I mean the United States jopodizing growth and the economic situation in France. How much of the talks at the G twenty and seven level was on China, on what China will do next and what Europe can do to bring China closer to We have to engage China and we won't China to abide by

their international commitments. We won't China to help us to build a new mudiatal approach as far as trade is concerned. But the right solution is not to engage into any kind of war against China. The right solution is to engage China, to have China on board trying to improve the multilatal institutions related to trade. When you're looking at the current situation, we all know that there is a

full weakening of all multilitable institutions related to trade. We want to build a new multiatle approach and a new multiatle order as far as trade and economy is concerned, and we want Shanna to be onboard with us. Minister. Domestically, the French President yourself are pushing for a lot of reforms, but there are strikes almost every week. Does that mean that they're at risk or will you double down? And does you even have more resolve to actually person's reportful.

We will keep the path of reforms, We will keep the pace of reforms because with Eminem mccon we strongly believe that we need those reforms to improve the competitiveness of French companies, to improve the attractiveness of France, and at the end of the game, to create more jobs for French people. So we have already decided last here to introduce a total of a whole of the French

tax system. We have been able to modernize the liberal market in France, and this year we will adopt a new law on competitiveness for French companies, especially for French samese, which will allow us to have more competitiveness within French companies. Because the key issue is first of all to improve the level of growth and the creation of jobs in France, but also to restore the credibility of the French political power.

But the French want to be reformed or you concerned that the large majority of French people one of those reforms, because we are in a democracy and in the democracy there are people that are against reforms. For there are strikes. This is something normal and we have to live with that. But at the end of the game, we will keep the reforms, we will adopt the laws, and we will

improve the situation of the French people. And for the moment, there's no talk of retracting some of them or watering down. It is really not the right solution. It's what have been down during the last three decades. I would say we wanted to do something, there were strikes and the French governments decided to withdraw that we formed. We won't do that. We will stand firm and we will put those reforms to the end for the sake of improving

the situation of French people. We are not doing reforms of the sake of doing reforms and being able to say, well, there are a lot of reforms in the front. That's not the point. The point is to improve the economic situation of France and the political credibility of our nation. But as the one final question, do you worry about

the high level of the earl? And then well you go because a lot of these people are waiting to go into your photo opportunity for the G twenty, But are you worried about your own I'm not worried about the level of the euro because I think that it reflects the growth and the economic recovery in Europe. So that's not the point of concern for us. My point of concern is really linked to the situation on trade. Okay, minister, thank you so much for joining you. Deputy Prime Minister,

same check, thank you for joining us today. On Bloomberg, there were a couple of days ago a huge red Bloomberg flash saying Turkey was calling its snap elections. Is that good for investors or is that bad for investors? It's actually good news market reactions so that the reason is that assessive saves investors from getting worried for a t months. Normally elections were scheduled for November, so that

brings it forward and that eases essentially uncertainty, reduces it. Plus, you know, it's snapped elections means you don't have a prolonged campaign period, only two months. Election economics is highly likely to be very limited, noise usually associated with elections likely be subside. So in that sense, I think it's good needs for investors. It will provide clarity, get a

fresh mandate and hopefully start with the reforms. What is the question you've got the most here in the I m F. Is it on the snap elections or is it around the following era. Well, yesterday I had meetings with investors. You know a number of US investment banks hosted a number of events, so I was able to interact with almost hundred investors. I think the key question in their mind is what sort of policy framework post election? Well, Turkey moved to a more of an orthodox, monitored policy.

Will Turkey jump start second third generation reforms to avoid the middle income trap? Things like that. Those were the key questions. There was less about the outcome of the elections. It seems like everybody seemed to be banking on and you Turk. You had a story career, Mary Lynch, and then you've had your public service to your nation of Turkey, and part of that has been a constant depreciation of

a Turkish lera for any set of reasons. There hasn't been a lot of central bank action on the lira yet. Are we at a tipping point where if there's further lira erosion depreciation, devaluation, that you and Mr Arawana have to act well? For ten years they appreciated in nominal terms last few years, which has been traumatic for Turkey because of geopolitics and all other you know, domestic and

external shocks, leadra has been weak. Some support for Lada would help, you know, I can't make a call on monetary policy because center back is independent. However, having said that, clearly some support would help within that and whether the idea that some support would help is do you do it yourself or do you need institutional allies to help Turkey to stabilize lira or even strengthen it. Can you go by? Can you go to long? Well, it's gonna

be a combination of factors. First of all, I think uh elections and post election, you know, reviving reform program, you know, moving to a more simplified monetary policy framework. I think that would provide a strong message. The worst is likely behind Turkey in the sense that you know, tourism is recovering very strongly. Economy has done very well last year. Momentum is still reasonably strong. It's moderating. We should ease pressure both on inflation and on current account deficit.

So fundamentally we still have a strong fiscal position. We have load that to GDP, and the banking sector is still in reasonably good health. The two rough spots in Turkish economy current account deficit and inflation. I think with some moderation in credit growth and some reform effort, we could kind of like regain market confidence and put behind you know, these difficult episode. And I want to get

on Turkish credit in a second. But when you look at the devaluation of the leri ten percent in large, why has the central bank not active? Well, center Bank has reasonably indicated that they will act. I think it is important that we bring inflation back on a lasting basis to a single digit. Now this is very critic go the only way Turkey was able to deliver very strong growth and by the way, it's like five point eight percent for fifteen years. He was on the back

of disinflation, sound macroeconomic policies, structural reforms. Now we cannot afford to let that slip. But it is the central bank truly independent Turkey. Well, legally there's nothing holding them back. They get appointed for five years, they cannot be removed. They only mandate is price stability and in death sense is independent. But there has been there has been, you know, strong debate about where the monetary policy stands should be.

Now whether or not that has been effective obviously that's open to questions. But the central Bank meets on Wednesday. Do you think on Wednesday they will take decisions independently of political influence. I again, Center Bank is independent and they can act independent day. So it's all boils down to the Monetary Policy Committee. I'm saying this. Legally it is so, and practically it is so. There has been occasions that has been cases West Center Bank did respond

despite despite an intense debate where monetary policy should be. Minister, I want to ask you about the sprawl of the levant in the Middle East and the Turkey that we see right now. Your remit his financial Your claim is what you did for the Turkish economy. I think of Robert Calvin's Brook, the return of Marco Polo, that's just out just talking of a new Eurasia. How did your Turkey and with a domestic tumult of Turkey, how does

it fit into the region in three years or five years? Well, first of all, we Turkey right now is the world the largest refugee hosting country. We host a combined Iraqi Syries about four millions. Are you're getting enough support from the West on that you've got the current We appreciate Europeans support, even though it's been very slow and limited. Turkey has spent close to thirty four billion dollars over

the past six seven years of refugees. We can afford it, and we're doing it simply because we feel that we have to do it, you know, because they have no choice. They're running for their lives. So my point is Turkey is looking forward to somewhat more stable, more democratic, more peaceful region. Why and we want to help reconstruction. We want to help. I'm not talking about business yet, purely helping, but we need to have a lull in violence. The

good news is the barbaric Isis has been dismantled. That's very important, very important. We it's time now to stabilize Syria. Iraq has gone a long way in terms of stabilization, even though it's not fully there. Then we can talk about reconstruction. You're excerpt really important voice your childhood in southeastern Turkey. With all the different tensions within Turkey, do you see out of the present chaos of the political

domestic damage has been done? Do you see a new Turkey where there can be a more domestic piece from the west of Turkey to the east. Well, the current Turkey, unfortunately is a product of a number of traumas that we have experienced. It is very unusual to have a cultish religious network try to grab the power. It's an alien concept. I mean, it's very hard for our friends and all lies to understand, but it's largely behind us.

At some point, Turkey was subject to intense terror attacks thirty major terrorist attacks between mid two thousand fifteen and of two thousand sixteen, and that was because we had nine d eleven. We have nine hundred eleven kilometers of border with Syria, and Syria is no longer a functioning state. Turkey now has a good grasp. We build a wall, we're there, so it's under control. So what I'm trying to say is that most likely the worst is behind us.

Rebuilding new Turkey. We require going back to strengthening rule of law, enhancing standards of democracy, continue to boost fundamental rights and freedoms for everybody. Now, I don't believe that there is less of a commitment to this. What is happening right now, the threat level, the perceived threat, and the real threat is there, and that's why Turkey is responding the way it has response. In depicting Premners, we want to go back to the economy and back to

the lira. Is there anywhere to support the Lira that the central Bank could do without raising interest rates. Well, I think we're beyond talking. Uh, you know, clearly, at some point we have to convince the markets that we are able to bring inflation down, that we are able to contain current account deficit. The world around us is changing.

I mean right now, global growth is there and maybe sustained for a little, you know, for a couple of years, but this is the time when we address underlying vulnerabilities. Now the bright spots are we have a strong fiscal position, we have a healthy banking system. The real economy is doing well, but the rough sports needs attention. Does that mean that that something on Wednesday? It would be a strong message to the investor. I know it is that.

I know you're trying to get me to say, but you know, it wouldn't be appropriate for me to really comment on what sentiment will will not do on Wednesday. We wouldn't be of course, of course, Deputy Premieres. So thanks so much for joining it. It's a great pleasure. Thank you. Thanks for listening to the Bloomberg Surveillance Podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter, Tom Keane

before the podcast. You can always catch us worldwide. I'm Bloomberg Radio