Gov’t takes a step toward IMF accord

Bloomberg

refid:11360659 ilişkili resim dosyası

Turkey will draw up a "timetable" for future talks with the fund when Erdoğan returns to Turkey, the prime minister said at a Chatham House event in London. The government understands the importance of budgetary discipline, he added.

Turkey is seeking IMF lending of between $20 billion and $40 billion to help shield the country against the global slowdown and close a foreign financing gap that Central Bank Governor Durmuş Yılmaz estimates at $30 billion.

Erdoğan aimed to make "rapid progress" toward a new loan accord at meetings on the sidelines of the G20 meeting in London, he said earlier.

The prime minister met IMF Managing Director Managing Director Dominique Strauss-Kahn Thursday. Central Bank chief Yılmaz had urged the government to sign the agreement as soon as possible to help strengthen investor confidence in the economy.

"The next critical thing is when they will invite the IMF mission because Economy Minister" Mehmet Şimşek "has said before that they can’t risk another mission failure," said Yarkın Cebeci, an economist at JPMorgan Chase in Istanbul. "It will be a very powerful signal when they reinvite them."

Turkey and the IMF broke off talks in January amid disagreement over government spending and changes to the tax system designed to increase revenue and reduce evasion.

Meanwhile, an IMF deal "could be supportive of Turkish assets and the Turkish Lira, in the short term," Goldman Sachs economist Ahmet Akarlı said in an e-mailed report. Loans from any IMF agreement should help ease balance of payments pressures and "provide stronger fundamental support to the lira," London-based Akarlı said Friday.

The deal would also aid the Central Bank in cutting interest rates, he said. The Bank may reduce the benchmark rate to 8.5 percent, Akarlı added.