ECONOMY

Turkey is after big US loan

ANKARA (AFP) – Turkey hopes to complete in three months talks with the United States on a loan of $8.5 billion (7.4 billion euros) from Washington to cushion the economic blow of the war in neighboring Iraq, Economy Minister Ali Babacan said yesterday. «I think the loan negotiations will be completed in three months if any unpredicted development does not happen. There is no obstacle in the way of this loan at the moment,» Babacan said in an interview with NTV television. Following its invasion of Iraq, the US allocated a grant of $1 billion for Turkey, which could be converted to loans of $8.5 billion, to support economic recovery efforts in the crisis-hit country and help it overcome the economic impact of a war next door. Ankara forfeited a much bigger US aid package – of $6 billion in grants or up to $24 billion in loans – when its Parliament rejected a US demand to use Turkish territory as a springboard for an invasion of Iraq from the north. Babacan said talks on the loan would start after the International Monetary Fund (IMF) approved the latest review of Turkey’s progress under a $16 billion standby deal and released a $500 million tranche. The IMF executive board was expected to give the go-ahead later yesterday. Washington has tied its assistance to Turkey’s adherence to the tight conditions of the IMF-sponsored recovery program. US and Turkish officials have already held preliminary technical talks on the loan, Babacan said. The negotiations are likely to be completed by the next IMF review, expected in late October or early November, he added. Babacan said the government had designed its spending plans on tight criteria and did not envisage any loosening in the budget through counting on the expected arrival of the US assistance. Turkey has been battling a severe recession with the help of a three-year IMF standby program since 2001 when a banking turmoil wreaked havoc in the economy.