ECONOMY

Turkey aims for IMF deal

WASHINGTON – Turkish Economy Minister Kemal Dervis hopes to work out a deal with the International Monetary Fund (IMF) by the end of October to bridge a 2002 financing gap. Dervis confirmed that in a series of meetings last week with the IMF, World Bank and US Treasury, he had requested additional funding for next year to help Ankara deal with the economic fallout from Sept. 11 attacks on the United States. The minister said there was definite support for helping Turkey bridge its financing gap and that he was confident negotiations would be successful. I don’t have an exact timetable, but I believe the next few days are going to be very important on all sides, Dervis said at a news briefing. I hope we can have the (IMF) review, perhaps not in the middle, but before the end of October, he said, referring to a review of Turkey’s $15.7- billion IMF loan program. Dervis said he hopes that review will include bridging the financing gap for next year with multilateral aid or some other form of support. Turkey had been expected to complete the next review by the middle of October, but the nation’s economy has suffered in recent weeks as a result of the Sept. 11 attacks, which have shaken confidence in emerging markets around the world. Last Monday, Dervis said the impact of the attacks would wipe as much as one percentage point off economic output next year after a contraction of about 8 percent this year – an outlook that makes renegotiating IMF targets for 2002 a necessity. Turkey needs foreign help to manage a huge domestic debt load and extricate its economy from its worst recession since 1945. The debt load and contraction are legacies of financial crises in November of last year and February of this year. We have explained through official channels the need for financing that matches the targets of our program, they will definitely support us, Dervis said. The need for some official financing that was not originally foreseen in the 2002 numbers is accepted on all sides. Dervis said he had general agreement that international uncertainty following the attacks on America meant Turkey, a NATO ally, needed additional financing in 2002. Everyone accepts that because of the latest events there is a higher financing need. We have to decide on the amount and shape of these in the coming days, he told reporters. Dervis declined to specify how large the financing gap would be or how it would be bridged, saying only that all alternatives were under discussion. The IMF acknowledged Turkey has asked for more cash, but said discussion so far had been more concerned with policies. We note that the Turkish authorities have expressed the need for additional extra financial support, IMF spokesman David Hawley said. Our discussions… have so far focused on policy measures needed to keep the program on track. A global downturn has scuppered Turkey’s plans to export its way out of trouble, and upheaval in the Middle East has hurt its ability to borrow on international markets. Turkey has an economic recovery plan backed by $15.7 billion in IMF and World Bank lending for this year. Markets in Istanbul are very keen to see details of aid for 2002, which some analysts say will have to be $10-15 billion. Dervis met US Vice President Dick Cheney on Friday to update him on the economic situation and to reiterate Ankara’s support for fighting terrorism. Dervis said helping in the fight against terrorism would come at a cost to Turkey. Turkey will have to do its part to shoulder some of that cost, but in the interest of the strong world economy… obviously both international institutions and the (Group of Seven industrial nations have) an interest that these costs are borne in such a way that the (economic) recovery can come. Finance ministers from the G7 countries – the United States, Britain, Canada, France, Germany, Italy and Japan – met in Washington over the weekend. He also stressed that Turkey would have to take action at home in order to secure a deal with the IMF or other lenders. Like other countries we have to show additional efforts. Particularly on the budget and related issues we must be fast and determined, he said. We are working on cutting state spending as quickly as possible.