IMF frowns upon Turkey’s regional aid initiatives

ANKARA (Reuters) – The International Monetary Fund, Turkey’s key economic mentor, urged the government yesterday to revise plans to boost jobs in poorer regions because they could damage state finances. However, Hugh Bredenkamp, the senior IMF representative in Ankara, speaking on CNNTurk television, stopped short of calling for it to be withdrawn altogether. «We have had great trouble with the broadening of incentives,» said Bredenkamp, adding that any development aid should target certain sectors, but not all businesses. Turkey and the IMF reached agreement on a new $10 billion standby deal in December to replace a $19 billion accord which expired this month, but the new deal still awaits approval. Finance Minister Kemal Unakitan said yesterday that there was no problem from Turkey’s point of view over the loan pact. Unakitan told reporters the government would maintain budget and fiscal discipline regardless of any increased spending caused by the subsidies. «From our point of view there is no problem in talks with the IMF. There is nothing on which we cannot reach agreement,» Unakitan said. Under the plan, the number of provinces benefiting from subsidies in areas such as tax, social security and energy would increase to 49 from 36 currently. «It’s possible to cut some spending items and investments in particular in 2005, as we did in 2004, and after that (a rise in) indirect taxes will be considered,» a Turkish economic official said.