ECONOMY

Turkey sees no obstacle to US loan guarantees

ANKARA (Reuters) – Turkish Economy Minister Ali Babacan said yesterday Turkey was confident it would shortly secure up to $8.5 billion in US financing despite lingering tension with Washington over Iraq. The release of the cash may indicate the two NATO allies are on their way to patching up relations damaged by Turkey’s refusal to allow US forces to attack Iraq from its soil. «There doesn’t appear to be any obstacle (to the release of the credit) at the moment, but it would be best if we behaved prudently,» Babacan told reporters at a news briefing. The US has delayed the release of a $1 billion grant, convertible into up to $8.5 billion in loan guarantees, since March saying the aid was tied to progress on economic reform under Turkey’s $16 billion IMF pact. The International Monetary Fund on Friday approved its latest $500 million loan tranche to Turkey saying Ankara had speeded a range of reforms of its frail economy. Government officials would travel to Washington on August 18 for talks on the aid, which could be released in up to five instalments, Babacan said. Turkey wanted officials from the IMF to join the talks, he added. Muslim Turkey is still weighing a US request to deploy troops to help secure Iraq, but it is unclear whether the latter will wait for an agreement before releasing the credit. Washington has not made a direct link between the financing and Turkey’s deployment of the peacekeeping troops, though it has asked Ankara to suggest ways to improve battered relations. Approval of the financing would help Ankara meet any economic fallout of the war and pay down a domestic debt of $125 billion, swollen by a 2001 financial crisis. Babacan said the financing could reduce Turkey’s debt rollover ratio by five percentage points in 2004.