On Friday, 'fourth economic package' was announced. Since it is the fourth package, there must have been three packages announced earlier. I do not want to be unfair at this point, because I remember the third package. On the other hand, my attitude is not that unfair at all. First two economic packages, God knows whatever they were, did not occupy the national agenda and thus my agenda. And the third package was a regular 'mixed' law involving several decisions from all kinds.

The only 'worthwhile measure' in that 'mixed law' was the modification pertaining to the labor market: 'Short-time working' allowance system, which implies that the labor cost that will not be met by the employer will be paid temporarily by the state was modified and the period of receiving payment from the allowance as well as the quantity of the payment received was extended.

However, the conditions that have to be met to benefit from this allowance are quite challenging. As far as I am concerned, the number of people that made an application to benefit from the allowance was below twenty thousand in February. According to the statement made by Ministry of Labor Faruk Çelik, the number rose to 132 thousand.

The fourth economic package, in the initial form announced, seems to reflect a 'relatively' more satisfactory outlook. It 'seems' to be more satisfactory, because in the daily newspapers, the package was announced together with the detail that it will be put in force in a few weeks. It is 'relatively more' satisfactory because it includes more components in comparison with the third package. Nonetheless, it is not possible to talk about an absolute satisfaction; at least we do not have complete information on the content of the document. Two points in particular grabbed by attention and I would like to comment on those despite the lack of sufficient information on the package.

First point is: Almost half of the measures seems to be directed to enable the functioning of the loan market even slightly. It is clear that the diagnosis is correct. Nonetheless, this diagnosis also seems to be unsatisfactory since the measure that I attach high priority to is touched upon only implicitly: The news text solely says "We will take steps to improve the credit flow between the financial sector and the real sector". Most probably, they are referring to a practice similar to the credit guarantee mechanism, addressed several times in this column. At least I hope so.

And the second point is: It is announced that to stimulate the domestic demand, rate of private consumption tax imposed on products of white appliances and automotive sectors will be cut temporarily for two to three months. However, there are four uncertainties: We do not know the exact duration of rate cut; we do not know how much the rate will be cut; we do not know the particular products covered by the practice; and we do not know when the rate cut will be initiated.
The most important uncertainty here is the one pertains to the beginning time of the rate cuts and it is related to a problem that economist study on. The problem is named 'announcement effect'. If you announce that you are going to introduce a measure in the future and if the announcement is convincing, it starts to show its impact right away after the announcement: either in a positive or negative direction.

Unfortunately, this announcement infers a negative situation. Now, everyone willing to by a white appliance or automotive product knows that they can buy the products at relatively lower prices after the fourth package takes effect. So, why would day buy those products now? In this sense, one thing is highly obvious: If the lag between the date of announcement and data of enforcement increases, sellers of the said goods (especially small retailer) will face a significant problem as the demand for those goods will come to a halt.

In short, the intention of the package is good; but unfortunately, there exist significant deficiencies. Let us hope that the decision makers will not wait for several weeks to put the measures in force and the 'fourth' package takes effect immediately. This way, uncertainties and potential negative outcomes disappear and we take a serious step against the crisis.

This commentary was published in Radikal daily on 15.03.2009