Turkey, IMF end deal talks

ANKARA – Turkey and the International Monetary Fund have completed talks on the seventh review of a $10 billion standby deal and the IMF expects to be able to complete the review in February. Financial markets closely watch progress in Turkey’s talks with the Fund, which has helped the country recover from a deep financial crisis in 2001 and loan tranches are released with the completion of reviews. Economy Minister Mehmet Simsek told a joint news conference with IMF officials that Turkey’s parliament was expected to approve in January a key reform of the social security system, which is central to the reform package sought by the Fund. «We have completed talks on the seventh review of the standby accord,» the minister said. The IMF’s mission chief for Turkey, Lorenzo Giorgianni, told the same news conference that the Fund should be able to complete the seventh review in February. The current standby deal expires next May and the government has yet to decide on a follow-up deal. Any future agreement is expected to be more limited in scope, possibly without funding as the IMF says Turkey no longer needs financial assistance. «In the coming months I will present the options to the cabinet and after that it will be a political decision,» Simsek said when asked about future relations between Turkey and the Fund. Turkish markets were closed yesterday as part of a public holiday marking the Muslim Eid al-Adha feast and will reopen on Monday. Privileged position The IMF’s Giorgianni said Turkey was in a privileged position in being able to decide its own course of action in its future relationship with the Fund. «Turkey has done remarkably well over the last few years. Not only have economic indicators improved sharply and vulnerabilities reduced, but more fundamentally economic institutions have been strengthened,» he said. Turkey’s economy has grown at an average 7 percent in recent years and annual inflation has fallen to single figures from as high as triple digits in the 1990s, while foreign investment has poured into the country. A key element now in the completion of the deal is the passage of the social security reform, which has been subject to legal challenges in the past. «We have reviewed the draft and it has undergone a number of changes since the ruling of the constitutional court. I can say that we are satisfied with the current draft,» Giorgianni said. «The burden on the public finances will be huge if this reform is not completed,» he added. The government said earlier this month it expected the reform, whose approval has been delayed several times, to pass through parliament at the end of December. Amid resistance from unions and the opposition, former President Ahmet Necdet Sezer vetoed the bill and a parliamentary election this year – in which the pro-business Justice and Development Party (AKP)was re-elected – delayed the reform further. Simsek also said the government expected economic growth of 4 percent in 2007, lower than an official target of 5 percent. The International Monetary Fund delegation had begun talks on Monday in a follow-up to a visit in October, when it left the European Union-applicant country without concluding discussions with the Turkish authorities on the seventh review.