ECONOMY

Turkey must make extra efforts to secure IMF money after poll

ANKARA (Reuters) – Turkey’s next tranche of $1.6 billion from a $16 billion IMF accord will be paid after November 3 polls and its approval would depend on the new government, a visiting fund official said yesterday. The IMF said it needed to see a swathe of reform pledges kept, including politically sensitive moves to lay off thousands of state workers, before it could complete a fourth review of the program, designed to help Turkey out of crisis. «The completion of the review will go to the period after the elections,» IMF Turkey desk chief Juha Kahkonen told a news conference at the end of an inspection visit to Turkey. «The timing depends on when the conditions are met and it depends on the government.» Turkish analysts said Kahkonen’s announcements contained few real surprises for markets, which have long expected the loan payment to be held over until after the election. The main stock index dipped to end the day 1.09 percent lower at 9,189.70 points while the lira edged down to best bids of 1,647,000 to the dollar in trade value-dated Thursday from Tuesday’s 1,645,000. Analysts were curious, however, about what Kahkonen called «some pressure» on the fiscal side of the loan pact and measures he said the government would take to address it. Financial markets worry that a post-election government led by the popular Justice and Development Party (AKP), suspected by the powerful military for its Islamist roots, or a weak coalition of several parties may spell trouble for the IMF pact. Kahkonen said the IMF board hoped it could hold a meeting in Washington to decide on the payment «relatively soon» after the election. «Additional efforts will be needed in the coming period. The priorities include reducing redundant positions in state enterprises and adopting a privatization plan for (state tobacco and alcohol concern) TEKEL, preparing direct tax reform legislation and banking reform legislation,» he said. Turkey has promised the fund that it will lay off two-thirds of around 45,800 state workers identified as redundant by the end of October, a politically difficult step within weeks of a general election. Kahkonen stressed the importance of the primary surplus to managing Turkey’s debt load, signaling the fund might not welcome a renegotiation of one of its headline targets.