Turkey to decide IMF follow-up deal in April

Turkey will decide on a follow-up deal with the IMF before the end of this month as its current $10 billion standby deal expires in May, Economy Minister Mehmet Simsek told Reuters in an interview on Friday.

Turkey to decide IMF follow-up deal in April
The International Monetary Fund plans to extend a combined $3.6 billion loan in a single tranche after completion of the remaining reviews of Turkey's economic programme, he said.

Simsek reiterated that European Union-applicant Turkey no longer needed financial support from the IMF, and would opt for a deal less stringent than a standby accord.

The government, which is embroiled in a court case brought by a chief prosecutor seeking the closure of the ruling AKP, is focused on a precautionary standby deal or a post-programme monitoring deal with the global lender.

"We are at a point where the public sector is not in need of urgent financing and an important part of the structural problems in the economy has been solved. As far as we see, there is no need for a new standby deal," he said in the interview.

Simsek declined to comment on a Standard & Poor's revision on Thursday of its outlook on Turkey's credit ratings to negative from stable due to rising risks posed by the political and global economic environment in the near term.

Standby accords with the IMF have been key anchors for Turkey's economy since a 2001 financial crisis. A key IMF concern lately has been Turkey's failure to pass the delayed reform of its social security system that raises retirement ages in an effort to cut a ballooning welfare deficit.

IMF talks

An IMF team arrived in Turkey on Thursday to start talks with the Turkish authorities. Investors, wary of Turkey's reliance on external financing, have been clamouring for information on its plans once the current IMF programme expires.

"I have informed my friends in the cabinet. We will probably have a roadmap after the review," Simsek said, adding he would attend the IMF-World Bank meetings on April 12-13. "I hope that the letter of intent would gain its final shape by then. We will probably have given the review its final shape next week," he said.

Simsek said Turkey would not change the main scenario in its monetary and fiscal policies after the end of its current IMF deal and that it would retain its single-digit inflation target.

Turkish inflation hovers around more than double an end-2008 target of 4 percent, sparking fears that it might return to double-digit levels of the past decades.

Simsek said a current account deficit at 6 percent of the gross domestic product was too high, but he saw no problems with plugging the deficit as long as the country preserved its political stability. The deficit, a main weak spot of the Turkish economy, topped $38 billion last year.

Turkey's private sector debt was not a concern for the government because of its healthy maturity structure and distribution among sectors, the minister said. The most recent data from the Turkish Treasury shows private sector debt stock at $158 billion.


Agencies

Last Mod: 05 Nisan 2008, 22:00
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