ECONOMY

Turkey promises IMF it will meet budget targets

ANKARA (Reuters) – Turkey yesterday promised the International Monetary Fund (IMF) it would stick by ambitious 2001 budget targets laid out under a $15.7-billion international crisis rescue lending package. Any deviation from fiscal targets is out of the question, Finance Minister Sumer Oral told reporters after a meeting with visiting IMF inspectors headed by Turkey desk chief Juha Kahkonen. One of the program’s most important legs is fiscal policy and the fiscal targets will be enacted with care, he said. Turkey’s 2001 budget aims for a primary surplus, which excludes interest payments on debt, of 11,568 trillion lira (some $8 billion at current exchange rates), or around 5.5 percent of national income. But the economy is not returning to growth as fast as IMF and government officials had forecast, as a recession sparked by a February crisis has proved hard to shake. Revised forecasts see a 5.5 percent contraction in gross national product (GNP) in 2001 but an annual 11.8 percent fall in the second quarter – the worst since 1945 – suggests that may be hard to reach. The budget deficit, after interest payments, is targeted at 29,700 trillion lira. Oral’s deputy Faik Oztrak said yesterday that Turkey can attract $6 billion in foreign direct investment (FDI) annually, more than seven times recent averages, if it slashes administrative red tape. If our country takes a share equal to the size of its gross national product, direct foreign investment can reach $6 billion, Oztrak said. Turkey’s IMF pact requires it to take steps to increase FDI which the treasury says averaged a net $767 million annually between 1995 and 2000. Oztrak was speaking at the start of two-day meetings of officials from the Turkish government and private sector, who are expected to draw up a joint action plan to address administrative barriers to investment. The action plan will be based on a joint treasury and World Bank report that blames a faulty and overbearing administrative system for keeping investors away.