Press Release: Statement by IMF Staff Mission in Turkey

October 25, 2005

Mr. Hugh Bredenkamp, the Senior Resident Representative of the International Monetary Fund (IMF) in Turkey, issued the following statement today in Ankara:

"An IMF mission led by Mr. Lorenzo Giorgianni today concluded discussions on the first and second reviews under Turkey's Stand-By Arrangement. These discussions included private sector representatives, financial institutions, and academics, as well as officials of the government and central bank. The mission and the authorities reached agreement ad referendum on a draft Letter of Intent and on the actions needed to facilitate IMF Executive Board consideration of the reviews. The agreement is subject to approval by the Management and Executive Board of the IMF.

"The discussions addressed the authorities' policy intentions for the remainder of this year and for 2006. During the mission, the government submitted to parliament a budget for 2006 consistent with achieving an overall primary surplus of 6½ percent of GNP (excluding the balances of two state enterprises undergoing privatization). In the mission's view, this is a strong budget that will help contain the widening external current account deficit.

"Other key topics for the reviews included the government's policies to strengthen the finances of the social security system, plans for tax reform and improved tax administration, monetary policy and the central bank's preparations for the adoption of formal inflation targeting, the implementation of the new banking law, the strategy for the state banks, and the steps needed to complete the resolution of assets taken over by the Savings Deposit Insurance Fund. As regards the social security reform law, it was concluded that more time was needed for the approval process to run its course.

"In the period ahead, the government intends to submit to parliament legislation allowing integration of the three existing social security institutions and legislation aiming at strengthening collection of social security contributions. Provided that these steps are implemented as envisaged, it is expected that the IMF Executive Board will meet to consider the completion of the first and second reviews in early December."


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