ECONOMY

Turks call for IMF changes

ISTANBUL – Turkish businessmen urged the government yesterday to ease some targets in an IMF-backed program to reinvigorate the country’s crisis-hit economy. Turkey definitely needs the International Monetary Fund’s tight program, said Tuncay Ozilhan, president of the Turkish Businessmen and Industrialists Association (TUSIAD), which represents the heads of most of Turkey’s biggest firms. But conditions change fast and there is a need to modify some of the targets and assumptions so that the program does not stifle itself, he told a TUSIAD meeting in Istanbul. Turkey is implementing an IMF-backed rescue package after two financial crises hit its frail economy in the past year, resulting in an 11.8-percent gross national product contraction in the second half of 2001, the worst since 1945. Muharrem Kayhan, head of TUSIAD’s advisory council, said the economic program, backed by a bailout package of $15.7 billion from the IMF and World Bank, would come to a position where it will shoot itself if amendments are not carried out. Turkish and IMF officials are now discussing 2002 budgetary targets which are expected to be announced in a letter of intent in the first half of October. The primary budget target surplus, 6.3 percent of GNP for 2001, has been proposed at 6.1 percent of GNP for 2002 according to a government budget draft obtained by Reuters yesterday. The draft envisages some 100,000 trillion lira of budget spending in 2002. Ozilhan said the government’s primary budget surplus target for 2002, a key indicator in the IMF-led program, was far from realistic and should be cut. Taxable income is smaller than expectations. Therefore this target is no longer realistic, he said. The primary surplus target must be lowered and in this way, much-needed resources… can be channeled to boost the manufacturing sector and employment. The government adopted a supplementary budget in June with total appropriations of 78,440 trillion lira ($51.3 billion) to meet demand for principal and interest payments. The revised budget envisaged a primary surplus of 11,568 trillion lira for this year, compared with 14,000 trillion lira for 2002 in the draft budget proposal. Ozilhan also urged the government to maintain stable foreign exchange rates after the national currency, the lira, was floated in February in the wake of the second financial crisis. The lira has since lost 55 percent against the dollar. In order for Turkey to earn more foreign currency and for the creation of more jobs, we need to have stable exchange rates to ensure a steady import of semi-finished and other raw material supplies, he said. Ozilhan said a government plan to ask the IMF to delay part of its debt of $5 billion due next year was the right thing to do in line with global economic slowdown.