Turkey’s economic package approved

WASHINGTON (Reuters) – The International Monetary Fund on Monday endorsed Turkey’s monetary policy to rein in inflation and said it reached a draft agreement with Turkish authorities on near-term economic targets. «The mission endorsed the central bank’s overall (monetary) stance and its current tightening bias, which should contribute to bringing inflation steadily back toward targets,» IMF mission chief to Turkey, Lorenzo Giorgianni, said. An IMF mission, led by Giorgianni, concluded talks on the fifth review of Turkey’s $10 billion IMF loan program on October 20. In a statement, Giorgianni said the government’s decision to maintain a primary surplus target of 6.5 percent of gross national product was a «prudent step and appropriate response.» The primary surplus excludes interest payments on Turkey’s large debt pile and is one of the main yardsticks of the loan program. He said Turkey’s program includes a number of safeguards to mitigate spending overruns during 2006 and helps ensure that next year’s expenditure targets are met. He said the review covered ways in which the government could strengthen tax administration, reforming the tax system and preparations for next year’s launch of a new pension and health insurance system. «In the period ahead, the government intends to firm up some of the policy undertakings and implement a number of actions to help underpin program objectives,» Giorgianni said. He said the IMF review would likely be concluded by the IMF board in December after measures agreed by the government are adopted. Giorgianni said Turkey’s economy had shown considerable resilience in the wake of a global sell-off of risky assets in emerging economies earlier this year. Domestic demand had slowed, but by less than expected, and there were signs of an upturn in exports, he added.