ECONOMY

Turkish budget is tailor-made to IMF specifications

ANKARA – Turkey yesterday made progress on a number of key budget and reform promises to the International Monetary Fund (IMF), which said its chief inspector for Turkey, was likely to speak at the end of the week about talks on $10 billion of new lending. Turkey’s Parliament passed the 2002 budget for the Finance Ministry in late-night voting on Tuesday, ratifying a tight fiscal plan essential to hopes of winning fresh IMF cash to add to an existing $19 billion package. The assembly was scheduled to vote on the overall budget late yesterday after deputies held a final debate. Parliament debates every ministry’s budget separately and passes each one before holding an overall vote. The Finance Ministry’s budget is a crucial element of the overall budget. The ratification comes as an IMF delegation visits Ankara to hammer out the details of new lending. IMF Executive Director Willy Kiekens, part of the visiting team, said he expected IMF Turkey desk chief Juha Kahkonen to make a statement about the visit tomorrow. The visit is expected to end this week, when the IMF team will take their findings back to Washington. Approval by the IMF headquarters is widely expected in Turkish financial markets. Turkey needs the new lending to help make its heavy domestic debt load manageable and drag it out of its worst recession since 1945. Parliamentary commissions have also started examination of the public procurement law, a reform to the system of state tenders that had been promised to the IMF by October. We are sensitive to the need to legislate this as soon as possible, Housing Minister Abdulkadir Akcan said yesterday. It is important for it to pass as soon as possible. The 2002 budget puts tight controls on state spending, particularly wages for state employees, and aims to reduce wholesale inflation (WPI) to 31 percent and consumer inflation (CPI) to 35 percent annually by the end of 2002. Annual WPI inflation in November was 84.5 percent and CPI inflation was 67.3 percent. The budget sees total revenues of 70,918 trillion lira (around $49 billion) against total expenditures of 97,831 trillion lira for a budget deficit forecast at 9.6 percent of gross national product. The budget anticipates 4-percent growth in 2002, compared with a forecast GNP contraction of 8.5 percent this year.