ECONOMY

Possible US war aid to Turkey seen as separate issue from IMF loan

DAVOS (Reuters) – The International Monetary Fund expects to visit Turkey early next week to discuss terms for the next phase of a $16 billion loan package, a top IMF official said yesterday. «We hope and expect that early next week we can send out a mission, but we don’t know that they can complete the work,» Anne Krueger, IMF first deputy managing director, told Reuters at the World Economic Forum. Turkey is anxious to negotiate terms for releasing $1.6 billion in IMF assistance from its overall package. The payment was delayed late last year when a new government was elected. Investors have been selling Turkish assets in recent weeks on concern over whether the Justice and Development Party can produce the needed economic reforms and meet budgetary goals. Krueger met with Turkey’s new finance minister, Ali Babacan, on the sidelines of the World Economic Forum yesterday to discuss the loan. She said the first IMF mission would be interrupted by Turkish holidays next month, and she expected a second mission would go in mid-February to complete negotiations. A draft letter of intent was sent last week, she said. But Krueger declined to discuss any of the specific budgetary actions and macroeconomic conditions that the IMF is looking to attach to Turkey’s loan disbursement. Asked how the IMF would take into account any economic harm Turkey suffers from a possible war with Iraq, Krueger said that was not part of the negotiations. «Our view is we are working with Turkey on its economic program, regardless of Iraq. If there is a fallout, it will be handled bilaterally.» Turkey has said it is in talks with the US Treasury over receiving some financial assistance in case of a US attack on neighboring Iraq. Investors recently have been selling Turkish stocks and the lira has been sliding on worries over the impact of a war on the economy.