ECONOMY

IMF delegation to visit Turkey soon for discussions on new government’s economic policy

ISTANBUL (Reuters) – The International Monetary Fund (IMF) will send a high-level delegation to Turkey very soon to discuss the economic plans of the new government, the IMF’s representative to Turkey said yesterday. New Economy Minister Ali Babacan said on Tuesday he expected an IMF team to visit within weeks to discuss the new Justice and Development (AK) government’s economic policies, expected to bring some changes to an existing $16-billion loan pact. «The high-level mission will visit Ankara very soon. It will be a short visit to exchange views on the government’s intentions,» IMF Turkey representative Odd Per Brekk told Reuters. The AK has said its plans will focus on upping growth in Turkey to ease the pain of financial crises in 2000 and 2001. The AK has also pledged to meet the commitments made by the previous government to earn the latest $1.6-billion loan tranche. IMF to stand firm Analysts have said the IMF is unlikely to show flexibility in key areas of the program, including a 6.5 percent primary budget surplus target set to demonstrate Turkey’s ability to pay off a massive domestic debt load. «The IMF will probably be sending the message that the primary surplus is not up for negotiation. At this stage, the fund could or should give a clear reply that they need to keep this primary surplus target in place,» said Isaac Tabor, senior emerging markets economist at Merrill Lynch in London. «They have to get every single point on the primary surplus they can in order to bring (the debt to GDP ratio) down.» Turkey’s domestic debt stock stood at 144,200 trillion lira (some $91 billion) at the end of October. Analysts said the IMF would be eying government announcements of firm economic policies to back up a general action plan it laid out late last week. Prime Minister Abdullah Gul is expected to present the AK’s program to Parliament in the next few days. Yields on Turkey’s domestic debt load have fallen some 10 percentage points and stocks have hit 10-month highs since the AK’s landslide victory in the polls raised hopes for economic stability in a country suffering from a series of fragile coalition governments in recent years. But the IMF will most likely press the AK to implement a series of measures delayed by the November 3 election, including public sector job cuts and further steps on privatization. Brekk said the AK’s mission would be made easier by the previous government’s implementation of the pact, which has brought higher-than-expected growth and falling inflation. «The program has shown that it has the ability to deliver the desired results. We see that in growth being stronger than expected and it could well exceed 4 percent. We see it also in inflation coming down more rapidly than originally targeted.» Turkey targets 4 percent gross national product (GNP) growth in 2002 and consumer price inflation (CPI) of 35 percent. CPI stood at 33.4 percent in October.