ECONOMY

Belt-tightening in Turkey

Ankara (AFP) – Crisis-hit Turkey will introduce new belt-tightening measures to meet tight fiscal targets envisaged in an IMF-backed recovery plan and win a $500 million loan, Economy Minister Ali Babacan said Sunday. An IMF review of Turkey’s progress established that additional measures were needed to bridge a gap estimated to reach 2.3 thousand trillion Turkish lira ($1.6 billion) by year’s end so that Ankara could meet a key target of a 6.5-percent primary surplus for the 2003 budget, Babacan said. «Make-up measures have been determined and will be speedily enacted,» the minister told a joint press conference with Reza Moghadam, the head of IMF’s Turkey desk at the end of an IMF mission to the country. The measures will not influence areas of social policy such as education and healthcare, said Babacan, whose Justice and Development Party (AKP) came to power last November with pledges to alleviate the social cost of economic reform. The introduction of the measures, along with the adoption of several social security reforms, is a precondition for the release of an IMF loan of some $500 million, part of a $16 billion stand-by deal. The release of the loan has been delayed since June as the government dragged its feet on the required reforms. «Continued strong policy implementation both on the fiscal account and the structural reform are highly important,» Moghadam said. The IMF executive board will meet before or after an August 4-15 summer recess to approve the installment if Turkey fulfills the conditions, he added. Meeting the primary surplus target is of utmost importance for the success of economic recovery efforts because it is considered a key indicator of Turkey’s ability to rollover its massive debt stock. Moghadam said the progress that Turkey had recorded would make it possible for the country to reach targets of 20-percent inflation and five-percent growth this year. For the first time in decades, both consumer and wholesale prices in Turkey fell in June, bringing the respective 12-month inflations to 29.8 and 29.6 percent. Gross national product, meanwhile, grew 7.4 percent in the first quarter of the year. Turkey has been battling a severe recession with the help of a three-year IMF stand-by program since the economy was hit by financial turmoil in 2001.