|
Turkey Expects $15.7 Billion From IMF, World Bank
ANKARA, May 15 (News Agencies) - Turkey hopes to receive some $15.7 billion from the IMF and World Bank by the end of 2001, but the country should firmly stick to a tough economic recovery program to ensure the inflow of aid, Turkish officials said Tuesday.
"Between May and December, we expect an inflow of some $15.7 billion from the IMF and the World Bank," central bank governor Sureyya Serdengecti told reporters here.
His statement came as the International Monetary Fund (IMF) executive board debated a final approval to a joint IMF-World Bank rescue package to back comprehensive structural reforms to remedy the crisis-hit Turkish economy.
"I believe the decision will be positive," said Economy Minister Kemal Dervis, the mastermind of the reform program.
The aid package was comprised of $13.3 billion from the IMF, including funds allocated earlier, and some $2.5 billion from the World Bank.
Dervis said Turkey would receive nearly $4 billion immediately after the package is formally approved.
"The remaining funds will be released depending on the implementation of the program," Dervis said. "The program should be kept strictly on track both to boost confidence and to ensure the inflow of aid."
Combined with tight monetary policies, the reforms concentrate mainly on speeding up privatization and rehabilitating Turkey's troubled banking sector, at the core of financial woes.
The plan pinned annual inflation target at 52.2% in 2001, 20% in 2002 and 15% in 2003.
Turkey's chronic inflation stood at 39% in 2000, but the declining trend was broken when the country plunged into a severe crisis in February, making the revision of economic targets inevitable.
The program envisages a negative growth of -3 percent in 2001 and a five- and a six-percent growth in the next two years.
It also aims to reduce the current accounts deficit from $9.8 billion in 2000 to one billion dollars by year-end.
Simultaneously with the announcements of the economic targets, Turkey's banking board revealed an action plan on putting the banking industry in order.
Serdengecti said that $2.4 billion of the expected aid would be used to support central bank reserves, while around $6.5 billion would be utilized in May and June to stabilize the financial markets.
"We believe that these funds will help pull down interest rates and balance the foreign exchange rate," the governor said.
Serdengecti also announced new monetary policies, necessitated after the crisis forced the government to float the Turkish lira, causing the currency to lose nearly 40% of its value against the dollar.
"In the coming period, one of the central bank's priorities in the short run is to implement a consistent monetary policy which aims to minimize the inflationist effect of the floating currencies," he said.
Under the program, Turkey will let foreign exchange rates be determined by market demand and supply, and the central bank will intervene only to compensate extreme flotations.
"The central bank will determine its reaction... according to the source, direction and possible effects of the shocks on foreign exchange," Serdengecti said, adding that the interventions would not affect the value of the foreign exchange rate in the long run.
The central bank will mostly use foreign exchange tenders against extreme flotations, while employing short-term interest rates to establish market stability.
The February crisis, the second of its kind in three months, broke the backbone of an ambitious anti-inflation plan put into force in December 1999 with IMF backing.
The crisis erupted amid fears of political instability as Turkish Prime Minister Bulent Ecevit and President Ahmet Necdet Sezer clashed over ways to fight corruption.
The row led to a breakdown of confidence among the volatile markets, already uneasy due to the government's failure to accomplish IMF-sought economic reforms.
|
