Turkey to seek replacement of IMF loan

ANKARA (Reuters) – Turkey has commenced writing a letter of intent on a new standby accord with the International Monetary Fund to replace a loan deal that expires in February, government economic officials said yesterday. Talks between the IMF and Turkey resumed this week, after they were interrupted in October to give Turkey time to finish work on banking, social security and tax reforms, areas on which the officials said the talks were now focused. Structural reforms such as restructuring the administration of tax revenues and making it more autonomous were a central issue. Cutting the social security deficit and a new banking law were also being discussed, the officials said on condition of anonymity. Turkey plans to pass a tax reform draft law this month and a proposed banking law next month. The existing $19 billion loan deal was designed to support the country’s recovery from a deep financial crisis in 2001. The IMF team could conclude its talks next week and return to Washington before Christmas, one official said. The officials said there was no clarity on how much the IMF would lend for the next three years, and on restructuring Turkey’s debt to the fund. Previously, officials told Reuters that the IMF could lend Turkey $10-$15 billion.