Turkey, IMF talks on track

Hurriyet Daily News with wires

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The IMF and Turkey are in "deep discussions" about economic growth targets and the budget, Yılmaz told reporters in Ankara. "Very soon, probably in few days time, a statement will be made."

Turkey is turning to the IMF for the fourth time in a decade as the worst global financial crisis since the Great Depression hampers the country’s ability to cover external financing needs that Yılmaz estimates at $30 billion this year. Turkey and the IMF may sign a loan agreement of $20 billion to $40 billion, Bülent Gedikli, economy chief for the ruling Justice and Development Party, said in November.

Turkey’s Treasury plans to borrow 5.6 billion Turkish Liras ($3.35 billion) on international markets this year, less than in 2008. The country’s plans may change if "additional resources are secured from international bodies," the Treasury said last month.

The government raised $1 billion in a sale of dollar bonds due in 2017 on Jan. 7, paying interest of 7.5 percent a year. A previous $10 billion accord with the IMF expired last May.

The IMF has asked Turkey to make cuts in the budget in return for further lending. The government should sign the agreement before nationwide local elections on March 29, Yılmaz said. The money should help the government repay debt and companies to cope with slowdown, he said.


Financial markets and business leaders have long pressed the government for a fresh deal in 2009, when the Turkish private and public sectors face hefty debt obligations.

Reuters had also reported late Friday that Turkey was expecting to conclude talks with the International Monetary Fund, or IMF, shortly on a loan accord. Contrary to some media reports, no problems exist in the discussions, reported the news agency citing government sources.

An IMF team has been in Ankara for two weeks as the country seeks a new anchor to support investor confidence and its sharply slowing economy against the shocks of the global financial crisis.

"The talks are expected to be completed in a short time," said one government source, adding that important progress was achieved in technical negotiations. Another source said that, contrary to some media reports, talks on the measures required to put the Turkish economy back on track were "very constructive."

"The talks may conclude within a few days," said the second source. Analysts welcomed the announcement.

"Within two weeks, and perhaps as early as late next week, we expect the Turkish government and the IMF to announce a three-year regular stand-by program with up to $25 billion funding by the IMF," JP Morgan Chase analyst Yarkın Cebeci said.

Economy Minister Mehmet Şimşek, who conducts talks with the IMF, plans to inform Prime Minister Tayyip Erdoğan soon on the stage of the discussions with the IMF. Erdoğan has the final say on a loan deal with the IMF.

The fate of the talks with the IMF should become clear before Jan 28, when Şimşek will head to Davos for the World Economic Forum meetings, sources said. Erdoğan has said previously that he would not agree to stringent austerity imposed by IMF as joblessness climbs in the country.