Erdogan set to air concerns at G20 summit over Fed monetary policy

Prime Minister Tayyip Erdogan said on Tuesday that he would voice concern during this week's Group of 20 summit in South Korea over the US Federal Reserve's plans to print money as part of its monetary strategy. Erdogan, in an interview with Reuters, also said that having weathered the international economic crisis with sustained growth, Turkey should be able to repay its remaining debt to the International Monetary Fund in 2012. He said less developed countries would suffer the consequences of the US decision to attempt to stimulate its economy by cash injections. "If those who have power apply such a policy, it is even a bigger danger," Erdogan said, when asked whether he would raise concerns over the Fed's strategy to print money to buy $600 billion of government bonds. The move could depress the dollar and destabilize the flow of funds to emerging markets. "In order to rescue the countries from forex pressure the remedy cannot be printing money, this will have repercussions for developing countries and least developed countries," Erdogan said. "And this is not a fair approach and Turkey cannot say yes to such a development." Erdogan also spoke of the need to reorganize both the International Monetary Fund and World Bank, saying there is a global debate over what should be the "determinant currency" for monetary policy and the role of gold. Economy Minister Ali Babacan warned last week that the Fed's strategy risked doing more harm than good. Erdogan said developed countries should observe fiscal discipline and adopt financial policies based on stability and confidence. Thanks to such policies Turkey has undergone an economic transformation since its 2000-2001 economic crisis and leapt from being the 26th-largest economy eight years ago to number 11, Erdogan said. The premier also said that not only has Turkey done without an IMF standby agreement for the past three years, but he also expects to wipe out remaining debts to the IMF in 2012. "Eight years ago we had a debt of $23.5 billion, right now the money that we owe to the IMF is $6 billion," Erdogan said. "And I guess towards the end of 2012 we will finish all our debts." He also rejected any notion that his government would loosen purse strings in advance of an election expected next June. "We are not considering a budget in line with the election. We have decided to follow the same path," Erdogan said. He said the inflow of foreign capital to the real sector is more important to Turkey than money coming into the country's booming stock market. "In a country where the free market philosophy is adopted, you cannot of course question why the capital is flowing into the country," Erdogan said. Turkish stocks have risen 34 percent so far this year, and the benchmark index closed at 71,543 points on Tuesday, up from 11,000 when Erdogan's Justice and Development (AK) Party took office in 2002. Turkey is the fastest-growing economy in Europe and third-fastest worldwide, Erdogan said, based on the 11 percent growth notched in the first half of the year. As of October, Turkey has raised around $6 billion in Eurobond issues so far this year. The Treasury also expected its domestic debt rollover rate to fall to 88 percent in 2011 from 90 percent this year.