Lipsky’s visit to Turkey may spark ’more drama’
Bloomberg
While Economy Minister Ali Babacan’s pledges of fiscal discipline are welcome, the task of persuading Prime Minister Recep Tayyip Erdoğan of the benefits of a new loan accord is "enormously challenging," Deutsche economist Cem Akyürek wrote in a report dated Wednesday.IMF funding would help Turkey to reduce the rollover rate for its debt, Deutsche said. Without assistance the country risks slower growth and growing deficits, it said.
Meanwhile, Turkey’s current-account deficit narrowed in April from a year earlier, the eighth consecutive month of shrinkage, reducing the need to seek external financing.
The deficit fell to $1.2 billion from $5.2 billion in April 2007, the Central Bank said Wednesday. The gap, the widest measure of trade in goods and services, is shrinking as the global crisis curbs demand for importeds. The country’s need for external financing is "falling rapidly" as the gap narrows, Central Bank chief Durmuş Yılmaz said on June 4.
"Even if it’s smaller, Turkey’s financing needs haven’t gone away," said Şengül Dağdeviren, chief economist for ING Bank in Istanbul. "There’s no reason to think that a narrowing deficit removes the need for IMF help because an accord will provide support in 2010 and 2011 when the deficit is sure to be growing again."
Turkish companies, excluding banks, repaid a net $654 million in foreign loans in the month. In the first four months of the year, non-financial companies repaid $2.2 billion, compared with net borrowing of $9.6 billion in the same period a year earlier.
Net foreign direct investment in Turkey fell 45 percent to $3 billion in the first four months, compared with the same period of 2008, the Central Bank said.