World Economy

Turkish FinMin: Actions 'don't reflect well'

Reported by Michelle Caruso-Cabrera, written by Catherine Boyle
Turkey will enact necessary reforms: Finance minister

Turkey's finance minister conceded that the country has "had a few experiences that don't reflect well" for investors in an interview defending the country's financial strength.

Mehmet Simsek defended his government and central bank's policy to CNBC and pledged to continue to allow free capital movement out of the country.

"We have had a few experiences that don't reflect well and we are aware of that," he admitted.

"Domestic issues have been taken out of context and that has reflected negatively on where we stand."

Mustafa Ozer | AFP/Getty Images

Three ministers in the Turkish government resigned last year after a wide-ranging corruption probe - which Prime Minister Recep Tayyip Erdogan has blamed on a "parallel state" within the Turkish state targeting his government. Erdogan has since announced an investigation into the police officers who arrested people as part of the probe.

(Read more: Turkey: What's going on and why you should care)

"We need to enhance competition and democratic standards," Simsek admitted.

Simsek, whose government has come under attack inside and outside the country after the value of its currency plunged, told CNBC that the government would not resort to controversial policies like imposing a transaction tax or imposing capital restrictions.

Paring capital movement 'out of question': Turkish minister

Turkey has become the focal point for concerns about emerging markets in recent weeks, after the U.S. Federal Reserve started reducing the rate of its asset purchases – a process known as tapering.

Last week, the Turkish central bank raised its overnight lending rate to 12 percent from 7.75 percent and the overnight borrowing rate to 8 percent from 3.5 percent. This only succeeded temporarily in halting the lira's fall.

(Read more: Turkey delivers massive rate hike to defend lira)

"There were some unjustified concerns about the unorthodox policy," Simsek said.

Economists are concerned about the country's large current account deficit, and its falling economic growth rate. Official forecasts for 4 percent expansion of the economy in 2014 are increasingly questioned by economists.

"The question mark really is over events over the last 12 months," Neil Shearing, chief emerging markets economist at Capital Economics, told CNBC. He warned that the country could slip into recession this year.

"We have to live with more moderate growth. We are realistic in policy matters. The most important thing is the central bank's capability and its independence," Simsek said.

(Read more: Why an emerging markets panic may be justified)

Simsek also set out his stall for investment in Turkey. He said: "Investors are welcome and they know it."

- By CNBC's Catherine Boyle. Twitter: @cboylecnbc