IMF deal possible after local elections

Bloomberg

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The IMF has placed "unacceptable obstacles" to an agreement, Erdoğan told a group of foreign journalists late on Feb. 27. Turkey doesn’t need IMF money as it raises cash from tax amnesties and attracts foreign investment, he said.

"It doesn’t bother us too much whether we sign any IMF accord before or after the election," he said aboard his plane, while returning from a campaign trip in the southeastern city of Van. "We will continue on our path whether we get IMF money or not. Turkey is not an ordinary country, it’s a safe haven."

Turkey and the IMF suspended face-to-face talks in January after failing to agree on budgetary measures for a possible lending program of between $20 billion and $30 billion. Turkey may turn to the IMF for the fourth time in a decade as the worst global financial crisis since the Great Depression hampers its ability to cover external financing needs of $30 billion. "It would be somewhat imprudent to rule out IMF money at this stage," said Tim Ash, head of research for central Europe, the Middle East and Africa at Royal Bank of Scotland Plc in London. "One thing we’ve learnt about the global financial crisis is that it’s extremely unpredictable."
Turkish companies won’t have problems refinancing their debts because of "good coordination" with the government, Erdoğan said. Turkey is also preparing a new package of measures to help industries hardest hit by the global credit crunch, he said. The economy grew 0.5 percent in the third quarter, the slowest pace in six years. Industrial output slumped 17.6 percent in December, the most since records began in 1986, after dropping 13.3 percent in November.

State-run lender Ziraat Bank will extend loans to Turkish companies at low rates of interest to help boost economic growth, Erdoğan said. The government expects other banks to do the same, he said. Turkey’s jobless rate, which jumped to 12.3 percent in the fourth quarter, the highest in at least four years, will start to fall from April or May as the country employs more seasonal workers in farming, Erdoğan said.

Investor Mark Mobius says Turkey may not need a loan from the International Monetary Fund providing the country continues to maintain a tight monetary policy and sell state asset sales, daily Vatan reported. The main risk is investor confidence, the newspaper quoted Mobius as saying in an interview. Mobius, who oversees more than $3.5 billion invested in Turkey, expects markets to begin recovering soon and has positive views about the Turkish economy, said the Istanbul-based newspaper.