Talks over new IMF loan deal to resume

Hurriyet Daily News with wires

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A two-day discussion on a new loan agreement between Turkey and IMF is expected to continue through Thursday, reported Reuters, citing government sources.

Turkey’s loan accord with the IMF will be for between $15 billion to $30 billion, daily Yeni Şafak reported, citing Economy Minister

Mehmet Şimşek. Turkey and the fund are still in talks over the details of the lending program, which will cover all of the country’s external financing needs, Şimşeksaid in Ankara, according to the newspaper. An agreement with the fund will also serve as an anchor to reassure foreign investors, Şimşeksaid.

Şimşek said last month that Turkey was making good progress with the IMF and that both parties see things "virtually eye to eye."

Government sources said last month that Turkey was seeking a loan of around $25 billion from the lender as the country's private sector and the government faced hefty debt servicing, this year.

The government has made no announcement on the size or duration of the loan agreement it is seeking from the IMF. The government cut back budget spending planned for 2009 by more than TL 3 billion.

Turkish business leaders and investors have long called for a loan accord to stabilize the Turkish economy that slowed sharply last year as its financial markets were hit by the global crisis.

Inflation to ease
Turkey’s Central Bank said December’s slowdown in inflation showed that falling demand was limiting the impact of a weaker lira and predicted that consumer-price growth will ease further in the coming months.

Lower global commodity prices are also supporting the disinflation process, reported Bloomberg, citing an e-mailed statement from the Ankara-based Bank yesterday. The Bank forecast that "the gradual fall in inflation will continue in the coming period."

Annual inflation in December eased to 10.1 percent, its slowest in eight months, from 10.8 percent the month before, the Turkish Statistical Institute, or TÜİK, said on Jan. 2.