Turkish minister throws the ball to IMF

Hurriyet Daily News with wires

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An IMF team will return to Turkey later this month provided the differences are resolved, Şimşek said, according to the NTV channel. The IMF is "insisting on the same spending cuts and revenue-raising measures even though Turkey doesn’t have public sector borrowing problems," Bloomberg quoted Şimşek as saying. Talks with the IMF on a possible loan accord will resume in 10 days, Prime Minister Recep Tayyip Erdoğan said on Jan. 27. An IMF delegation left Turkey on Jan. 28, after meetings lasting almost three weeks.

The IMF will be invited to return immediately once disagreements have been resolved, said Şimşek. "However, if they insist on keeping the same approach toward the issues then we may start direct talks a bit late," he said. "In the event of inviting an IMF team to Turkey in February, we may hold a joint press conference, send a letter of intent to the fund and complete operations, theoretically in February," reported Anatolia News Agency, citing Şimşek. That will only be possible if both sides come to an agreement, he added.

The IMF program is important to reduce the private sector’s concerns regarding foreign financing, said Şimşek. A possible IMF accord should bring some opportunities, such as foreign financing, he added.

As an extra measure, the Treasury may borrow less from the market and create suitable conditions for the private sector to borrow, the minister said. "Also, the [government bonds] in the hands of Turkish banks may mature earlier, supporting liquidity."

Compared to other countries, Turkey is in a better position regarding the ratio of borrowings to gross domestic product, as well as the balance in public finances, said Şimşek, adding that an IMFdeal "should not be made through the old receipt," referring to harsh spending cut requirements.

The minister said the IMF had brought up the "classic, public sector borrowing requirement reducing, spending-reducing and income increasing" precautions.

"Turkey does not have any problems regarding public sector borrowing," he continued. "Today’s circumstances are very different than those of the past. We have financial discipline. Any deal should take the existing global conditions and Turkey’s changing structure into account."

The global economy is expected to normalize as of mid-year, said Şimşek, adding that such improvement would help the Turkish economy considerably. Şimşek said Turkey could borrow with better terms than a lot of developing countries due to the confidence in its economy. "This year, we had planned for a $4 billion international bond issue. Despite problems in outside financing possibilities, we realized one-fourth of this in the first month of this year."

Turkey has prepared its own economy program in such a way that it can be executed even without an IMF agreement, argued Şimşek.