EconSource: Turkey Central Bank Says Inflation Target Should Be Set With Government

Turkey’s inflation target should be set together with the government, Central Bank Governor Erdem Basci said on Wednesday, a marked departure from the norm in the European Union that Ankara aspires to join.

Presenting the bank’s monetary and exchange rate policy for 2016, Basci steered clear of providing investors with any signals on policy, sticking to an “optimistic” inflation target of 5 percent for the next three years. He predicted inflation, which was 8.1 percent in November, would fall to 6.5 percent by the end of next year. The bank will face a crucial credibility test when it meets on December 22. Analysts say a failure to raise rates in tandem with the US Federal Reserve would further undermine investor confidence in the bank’s independence. Meanwhile, Moody’s said it expects low oil prices and slower domestic demand to help narrow Turkey’s current account deficit. [Reuters, Anadolu Agency, 12/9/2015]

Israel says will not forgo $1.76 billion compensation in Egyptian gas dispute
Israel is unlikely to forgo the near $1.76 billion it was awarded in compensation for Egypt halting a natural gas supply contract in 2012, Energy Minister Yuval Steinitz said Wednesday. “But I think that we will sit with the Egyptians, and there will be a dialogue, and we will think together how to move forward,” Steinitz said. Israel has agreed to send an envoy to Cairo to hold talks with Egypt. “I think we will find a solution because it is in both countries’ strategic interests,” Israeli Prime Minister Benjamin Netanyahu said Tuesday in remarks at a meeting of a parliamentary commission. Cairo said on Sunday it would appeal against an order by an international arbitrator to compensate state-owned Israel Electric Corp (IEC) and would freeze talks on future gas imports from Israel’s new gas fields in the Mediterranean Sea until the dispute is resolved. [Reuters, 12/9/2015]

EGPC denies report it is negotiating to delay dollar repayments
The Egyptian General Petroleum Corp (EGPC) denied on Tuesday that it was negotiating with banks to delay dollar payments owed to them after failing to receive its full dollar needs from the central bank in November. An EGPC official on Tuesday said the company was in negotiations to postpone dollar installments owed to banks. “The central bank did not provide the EGPC’s full dollar needs in November and that forced the authority to spend from its own resources,” he said. The EGPC later released a statement denying that any such negotiations were taking place, adding that the company was not at risk of missing scheduled payments. “The EGPC is on track and on time with its payment of dues to others,” it said. However the statement made no mention of whether the central bank had fully supplied the company with its dollar needs in November. [Reuters, 12/8/2015]

Minister says UAE on track to reduce oil reliance
The United Arab Emirates (UAE) is on the right track to reducing its reliance on oil, according to Minister of Economy Sultan Bin Saeed al-Mansouri. He expressed his optimism regarding the UAE’s 2016 economic growth, saying, “We’ve been through such cycles [of low oil prices] before, and we were able to overcome them and grow past them.” In its efforts to diversify the economy, the UAE aims to see increased economic contribution from small and medium enterprises (SMEs). In 2014, the sector accounted for 60 percent of the UAE’s non-oil GDP. Mansouri said the government is looking to raise that figure to 70 percent by 2021. In other news, the UAE Central Bank is set to start engaging with the country’s banks for full compliance with the Basel III set of global banking regulations. The Basel III rules, which are aimed at making the global banking system more resilient, include forcing banks to hold more and different types of capital to insulate themselves during downturns. [Gulf News, 12/8/2015]

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