ECONOMY

IMF visit to Turkey delayed

ANKARA (Reuters) – Turkish Economy Minister Ali Babacan said yesterday that a planned visit of an International Monetary Fund team will not begin tomorrow, contrary to comments made by economy officials earlier in the day. «We talked on the telephone again yesterday. I said, ‘Wait, we are still working.’ They will come when we invite them,» Babacan told reporters in the Turkish capital when asked about the timing of the visit. A government official said earlier the IMF team would arrive tomorrow to resume a regular review of the country’s $19 billion loan accord with the Fund. Financial markets are closely monitoring the review. A loan tranche worth about $500 million depends on the completion of the current review of the standby arrangement, which was agreed after a financial crisis in 2001. Some $2.5 billion remains to be disbursed under the deal. The IMF met Turkish officials in January, but divided the review into two stages because of a public holiday in Turkey. At the end of the first round of talks, Turkey’s treasury said it had agreed with the IMF on plans to cut budget spending to meet the cost of above-inflation wage and pension rises. Markets had been concerned about IMF reaction to hikes of 34 percent in the minimum wage and 21 percent in state pensions. The end-2004 consumer price inflation target is 12 percent. Ankara is preparing a revenue-raising package to cover the costs, seen amounting to 3,500 trillion lira ($2.7 billion). Officials say better-than-expected 2003 budget results mean the revenues needed would be less than 3,000 trillion lira. Turkey has succeeded in taming chronic inflation, bringing it below a 20 percent Fund-backed target in 2003 while achieving economic growth of 5 percent. After the completion of each review the IMF sets a date for its executive board to consider the release of the loan tranche.