IMF encourages Turkey about inflation target

ISTANBUL - Hürriyet Daily News

Higher inflation than rivals is to Turkey’s disadvantage, says Mark Lewis, IMF’s resident representative in the country.

The International Monetary Fund (IMF) encourages Turkey’s Central Bank to focus on the country’s inflation target and, to this end, its direct monetary policy, the IMF’s senior representative in Turkey, Mark Lewis, told the Anatolia news agency. The statement comes just as Parliament has approved a draft law increasing Turkey’s quota in the IMF.

The IMF’s year-end inflation forecast is 8.5 percent, said Lewis. “This is over the inflation target range of the Central Bank.” Low inflation is very beneficial for Turkey, he added. “If inflation in Turkey is higher than its rivals and trade partners, this will put Turkey in a disadvantaged position in terms of competition.”

Meanwhile, on May 24, Parliament approved quota increases as part of suggested reforms to the monetary fund. Turkey’s share in IMF’s financial resources will rise to 0.98 percent from 0.61 percent, and its Special Drawing Rights (SDR) will rise from 1.4 million to 4.7 million when the reform process ends.

“The reforms will go into force as soon as enough IMF members approve them. This process is expected to come to an end by October 2012, when the IMF and World Bank hold their annual meeting,” Lewis said.
The reforms envisage transferring more than 6 percent of the voting power in the IMF from developed countries to developing ones. Turkey will climb to number 20 from 36 among IMF member countries in terms of quota size.