IMF official holds talks in Turkish capital

Bloomberg

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Rachel van Elkan, the Fund’s Turkey desk chief, met with government officials in Ankara Thursday, a Turkish official said, speaking on condition of anonymity. The talks begun Wednesday evening by IMF First Deputy Managing Director John Lipsky and Economy Minister Ali Babacan.

Turkey and the IMF have been discussing a possible new loan program for more than a year. The two sides disagree over issues including the government’s spending plans and IMF demands for changes to the tax-collection agency.

Turkish stocks soared yesterday on expectations of a deal, as the benchmark IMKB-100 index gained 3.24 percent, rising to 35,715 points.

Meanwhile, Morgan Stanley lowered its forecast for Turkey’s economic contraction this year to 4.7 percent from 3.5 percent, citing the severity of the shrinkage in the first quarter of the year.

The recovery in 2010 will be "slightly faster" than previously estimated, Tevfik Aksoy, economist for Morgan Stanley in London, said in a research note yesterday. The Central Bank may be at the end of its easing cycle and any additional rate cuts could "be considered unnecessary risk-taking," Aksoy said.