World Bank urges Turkey to reform pension system to get IMF money

ANKARA (Reuters) – The World Bank urged Turkey yesterday to take steps to reform its ailing pension system, set as a precondition for a new 7.6-billion-euro IMF standby deal agreed in December. «The time for this historic chance to fix problems in Turkey’s social security system is now, today,» Andrew Vorkink, the World Bank representative in Ankara, told a news conference. The lumbering pension system is one of the biggest burdens on the Turkish budget. The International Monetary Fund has said the budget deficit is unsustainable and that the system must be reformed. A bill will be submitted to the Prime Ministry in the coming weeks, Turkish Labor Minister Murat Basesgioglu stated. The IMF is waiting for progress on the issue before its executive board approves the new three-year standby pact with Turkey that includes 7.6 billion euros in fresh lending. The previous 14.4-billion-euro IMF deal expired this month. Under the reform plan, Turkey aims to narrow its huge pension deficit by merging the three state pension payers into one institution and raising the retirement age. Women and men retire at 58 and 60 respectively under the existing system, burdened by people retiring much earlier than in the past. Turkey is currently running a deficit in its social security system alone of 3.5 percent of gross domestic product despite a young population, Vorkink said, adding that the country should not count on its young population as the number of pensioners will steadily rise. He repeated earlier promises to help finance the social security reform, saying not everyone would be happy with the reforms and that there would be losers as well as winners. Previous moves to raise the retirement age sparked demonstrations by labor organizations, which say poor working conditions do not permit Turkish workers to stay in their jobs as long as European workers.

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