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IMF to meet Turkish authorities over loan deal

Latest update : 2009-04-11

After successfully completing a three-year, $10-billion stand-by deal in May 2008, Turkey is discussing a new loan deal with the International Monetary Fund of up to 45 billion dollars, which is hoped will help combat an expected recession.

AFP - The International Monetary Fund said Friday it would meet Turkish authorities soon to finalise a long-delayed standby loan which reportedly could be reach 45 billion dollars.

"IMF staff and the Turkish authorities are currently actively engaged in discussing a policy package that could be supported by a stand-by arrangement," said Angela Gaviria, spokesperson for the Washington-based IMF.

"As part of this engagement, the IMF mission team and the authorities are preparing to meet soon, either in Ankara or Washington," she said.

She declined to confirm the loan amount.

Turkish newspapers reported Friday that Ankara was hoping to conclude in May the new stand-by deal with the IMF that could be worth up to 45 billion dollars.

The daily Referans newspaper quoted Economy Minister Mehmet Simsek as saying that the government had agreed with the IMF on basic principles and officials in Ankara were currently drawing up the technical framework of the deal.

"We have agreed that the budget will produce a deficit, or in other words, that we will not compensate for the decrease in tax revenues triggered by the contraction of the economy in 2009," Simsek said, adding that the government would set a limit on expenditure.

"Turkey is now working on the macro-economic framework. The IMF should accept that framework; we do not expect there to be a problem but there could be some bargaining on issues such as the budget deficit," he said.

Simsek said Turkey hoped to complete technical work by the IMF's spring meetings in Washington on April 25-26 and to get IMF approval for the stand-by deal in two to three weeks.

When queried on the size of the loan, the minister did not give a figure, but said it would meet Turkey's external financing needs during the length of the deal, the daily Radikal newspaper reported.

Radikal speculated that the new deal would be signed for three years and could be worth up to 45 billion dollars. Other newspapers said it could be between 30 to 40 billion dollars.

Financial analysts had previously speculated that the deal would be worth up to 20 billion dollars.

Turkey is under increasing pressure to sign a fresh IMF accord amid alarming signs from the economy. Gross domestic product slumped 6.2 percent in the fourth quarter of 2008 and industrial output plummeted a record 23.7 percent in February, strengthening expectations that a recession is on the way.

Turkey and the Fund initially began talks in January for a fresh loan after Ankara successfully completed a three-year, 10-billion-dollar stand-by deal in May which significantly stabilised the economy and resulted in strong growth.

Earlier this month, Prime Minister Recep Tayyip Erdogan said Ankara would soon invite an IMF team to resume talks after he ironed out differences with IMF chief Dominique Strauss-Kahn.

Erdogan's government is under fire at home for delaying the deal ahead of local elections on March 29 which saw the party lose support for its handling of the economic crisis.

Date created : 2009-04-11