ECONOMY

Turkey, IMF differ on taxes

ANKARA (Reuters) – The latest review of Turkey’s $19 billion International Monetary Fund loan pact has been delayed because the two sides are not agreed on government plans to lower some tax rates, economic officials told Reuters yesterday. IMF inspectors had originally been expected to resume their regular review of the accord today, but Turkish officials later said Ankara was not ready for talks, sparking investor worries about the government’s commitment to the pact. A loan tranche of nearly $500 million depends on the successful completion of the review. Turkey inked the loan deal with the IMF after a devastating 2001 financial crisis, and some $2.5 billion remains to be disbursed. The government has agreed to draw up extra measures worth 2,500-3,000 trillion lira for its 2004 budget after the IMF expressed doubts Turkey could meet a year-end primary surplus target of 6.5 percent of gross national product. But officials said the government has yet to convince the IMF of a plan affecting textile traders. Turkey wants to lower tax refunds to textile exporters and at the same time lower the VAT on their products from 18 to 8 percent. While Turkey sees savings of 1,000 trillion lira ($756 million) from the move, the IMF thinks it will save just 700 trillion lira and could encourage tax evasion.