Questions in the News
Responses to Questions About IMF Policies and Country Operations
Turkey
Last Updated: July 26, 2007| Question: After the re-election of the ruling AKP Party in Turkey, government and business leaders world have argued that Turkey can and should end relationships with the IMF. Do you think that is the right decision for the Turkish economy? |
| Answer:
MR. AHMED: This is a decision for the Turkish authorities, and as far as the IMF is concerned, we are cooperative. We work with our members in many ways and the range of ways in which we work spans having a relationship through a program, having a relationship through the surveillance function that we have, as well as providing capacity building and other support as needed in our core areas and as our members want it. The second point I would make is that in the context of Turkey, we have had a very fruitful and close relationship and we continue to hope and expect that that relationship will go forward. Finally, as to the precise form of that relationship, which currently is in the form of a program with Turkey, what follows when the current program expires is again very much a decision that the Turkish authorities will take and which the Fund will be guided by. But whatever the form of the relationship, we will be ready to work with and support the Turkish authorities in their quest for macroeconomic stability and financial stability.
July 26, 2007 Transcript of a Press Briefing by Masood Ahmed, Director of the External Relations Department, IMF |
| Question: Regarding Turkey's financial arrangement with the IMF, can we take it that the recent $1.1 billion disbursement by the Fund under the arrangement is a sign that the IMF is satisfied with the progress the Turkish authorities are making in the privatization of their electric grids? |
| Answer:
MR. AHMED: Our view, as set out in the statement that was prepared after the conclusion of the Board meeting, is that we believe the authorities should be congratulated for putting together a strong policy package which has facilitated the completion of the sixth review of the program that you are referring to. In particular, we think that the understandings reached on the measures to keep the fiscal program targets intact are a clear demonstration of the authorities' resolve to persevere with good policies. More broadly, as we have said before, we think that Turkey's economic performance in recent years has been impressive, which has been due to sound policies and structural reforms and also to a broadly favorable external environment. We also said, however, that the goal now needs to be to build on the success of recent years by first sticking to fiscal and monetary discipline to make a final push on disinflation and, secondly, to broaden and deepen structural reforms to durably raise growth rates to the levels that are seen in the fastest growing emerging markets.
May 24, 2007 Transcript of a Press Briefing by Masood Ahmed, Director of the External Relations Department, IMF |
| Question: Turkey, is gearing up for two critical elections later this year, and political tensions are rising. Do you see a possibility that such tensions could adversely affect or even derail the economy? Are you concerned that the government could resort to an "election economy" through the rest of the year? |
| Answer:
MR. DE RATO: Turkey is one of the success stories of recent times in the world economy, and I think we all have to salute and congratulate not only the Turkish authorities but also Turkish society for having made this so, and if you look at the reform agenda of Turkey in recent times, it has been impressive. So it is a country that has changed for the better and is facing its challenges.
Elections are a very important and welcome democratic process, but elections have their own dynamics, but that is not only a Turkish characteristic. It happens everywhere. Of course, we think that even during an election campaign the overall strategy, macroeconomic strategy that has to be kept in mind by policymakers. MR. LIPSKY: The questions relate to the potential impact of the political campaign on policies, but as you know, the government over the past few years in the context of Fund programs has been following a program, a policy of fiscal stringency responsibility that has been hallmarked by the maintenance of a primary surplus of 6 1/2 percent of GDP. That has been accompanied by structural reforms and by notable improvements in inflation performance. There is a Fund program with Turkey in effect this year, and the Turkish authorities have indicated their intention to maintain these broad trends—a primary fiscal surplus of 6 1/2 percent of GDP, continued structural reforms including new progress on social security and pension reforms. The central bank continues to follow an anti inflationary policy. As you may know, there has been an IMF mission in Turkey that in fact issued a statement that reported on the discussions that have just concluded with the Turkish authorities. That statement indicated that there has been success in reaching understandings about how the program will be implemented in the coming months. We remain very optimistic about the government's commitment to appropriate policies within the context of the program. It is our expectation that this will be another benchmark in Turkey's improvement. April 12, 2007 Transcript of a Press Conference by IMF Managing Director Rodrigo de Rato with John Lipsky, First Deputy Managing Director, and Masood Ahmed, Director of the External Relations Department, IMF |
| Question: On Turkey, the recent Fund mission has come back from Ankara, and there seem to be a lot of delays in the program. Does that in any way put the program at risk? Are there some concerns in Washington that the program isn't going according to plan? |
| Answer:
Regarding Turkey, there was a press release issued recently. But I think our overall assessment of the work of the mission is that there has been quite a lot of progress on a number of areas towards completing the review. For example, on the structural side, a strategy for moving forward with social security reform was agreed, as were actions to continue strengthening revenue administration and the next steps on banking sector reform. Those are all important things. With inflation still running well above target and expectations remaining elevated, the mission also endorsed the Central Bank's current tightening bias. I should also say that understandings were reached between the mission and the authorities on the measures to safeguard the achievement of the primary surplus target at the central government level. Where the authorities have asked for a little more time—and the reason why we have had to adjourn the work—is to work on options to secure the contribution of state economic enterprises to the primary surplus target. I think our overall assessment, now moving away from the mission itself to the broader question you asked, is that Turkey's performance under the program that the Fund has been supporting has been—and remains—good. Disciplined economic policies, especially a high fiscal primary surplus, have enabled reductions in inflation and public debt ratios and strong growth. There have also been significant structured advances made in banking, in tax reform and in privatization. Going forward, we do see that continued financial discipline and structural reforms, especially in the social security area, are needed to ensure fiscal sustainability and to entrench low inflation and strong growth. March 29, 2007 Press Briefing by Masood Ahmed, Director, External Relations Department, IMF |
| Question: Would you comment on the Turkish government's recent decision to delay privatization of the country's electricity grids citing the recent elections in November as a reason. Second, are you concerned that the Turkish authorities could deviate from the economic reform program in the time leading up to the elections later this year? |
| Answer:
First of all, I want to say that the Turkish program has been very successful and has been very broad and deep. There have been a lot of changes, not only in the fiscal environment of Turkey but also in the structural reform of the country, and many of them have been carried out. It is true that in the time leading up to the elections, the government will be making some important decisions. I have all confidence that both the government and the Turkish people are aware of the advantages that economic reform and macroeconomic stability have brought to the country. We will certainly remain engaged with the authorities, and we will, of course, be open and ready to collaborate with the next government.
January 16, 2007 Press Conference by Managing Director Rodrigo de Rato, IMF |
| Question: The IMF mission to Turkey said, nearly 3 weeks ago, that the IMF Board was expected to meet on the fifth review of the program in December provided that the Turkish authorities took a number of prior actions or completed work in a timely fashion. Do you now have a clearer time frame—like early- December or mid-December? And what does the Turkish government need to complete from this point on? |
| Answer:
Let me take the last part of your question first which is about prior actions needed to complete the review. These include submission to Parliament of a satisfactory budget consistent with achieving a primary surplus of 6.5 percent of GNP, and that is certainly a crucial step. The authorities are also working on other aspects of the policy package that are needed to safeguard the achievement of the agreed fiscal targets and to keep the momentum on tax and banking reforms.
As we have said before, the authorities are currently working to firm up these policy undertakings to pave the way for the completion of the review by the Board. Once these safeguards are in place, the understandings reached by the mission will be considered by the Board and that meeting remains scheduled for December; however, I do not have further precision as to timing.
November 16, 2006 Press Briefing by David Hawley, Assistant Director, External Relations Department |
| Question: What will be the focus of next week's Fund mission to Turkey? |
| Answer:
A mission is going to Turkey from October 9 to 20. It's going to have wide-ranging discussions. They will cover some budgetary prospects and policies; the inflation outlook; implications for monetary policy management; tax reforms and measures to strengthen tax administration; preparations for implementing social security reform; and progress in further strengthening bank supervision and reforming the state banks.
October 5, 2006 Press Briefing by Masood Ahmed, Director of External Relations, IMF |
| Question: Could you provide an update on Turkey and your general evaluation of the recent volatility. Also, when will the Board of Directors meet on Turkey? |
| Answer:
On Turkey, a press statement was issued by the First Deputy Managing Director Anne Krueger on June 29, in which she gave the IMF's overall assessment of the current situation and prospects in Turkey. To reiterate, we think that the authorities have taken strong action to address the impact of market turbulence, in particular, the 400 basis point cumulative increase in interest rates accompanied by more proactive marking up of liquidity through open market operations. We think these actions were necessary, given the imperative to both calm markets and to address the challenges on the inflation outlook.
Going forward, we have every confidence that the Central Bank and the authorities will carefully assess developments and take whatever action is necessary to ensure both that the inflation outlook in the medium-term remains contained, and also to ensure that Turkey is able to capitalize on the strength of its fundamentals in terms of its medium term growth prospects.
In terms of the timing of the Board discussion, we envisage a Board Meeting towards the end of this month.
July 6, 2006 Press Briefing by Masood Ahmed, Director of External Relations, IMF |
| Question: Do you know when the Turkey review is coming to the Board? |
| Answer:
The recent mission was concluded successfully, and a press statement was issued at the end of the mission. There is an agreement that the mission reached ad referendum with the government. On the Fund side, that agreement now has to be approved by Fund Management and by the Executive Board. On the government side, there are a few items on the budget and on policy changes that it is planning to implement. Assuming that those steps are taken on the timetable that was discussed with the mission, the Executive Board could meet to consider the completion of both the third and the fourth reviews sometime in July.
June 1, 2006 Press Briefing by Masood Ahmed, Director of External Relations, IMF |
| Question: Is the IMF concerned about the future of the Turkish economy due to the rapid depreciation of the lira associated with the flight of foreign capital and rising inflation? |
| Answer:
There is a consultation mission in Turkey now that has been there since May 5. It has made good progress, and is expected to complete its work early next week. Against the backdrop of recent volatility in emerging markets, including in Turkey, the Fund welcomes the authorities' continued commitment, which has been restated at the highest levels, to prudent macroeconomic policies and to the ambitious reform agenda which is set out in the program that the Fund supports.
May 18, 2006 Press Briefing by Masood Ahmed, Director of External Relations, IMF |
| Question: Turkey's parliament on April 19 passed key legislation on social security reform. What is your view of that situation? |
| Answer:
Turkey is a very good example of a country that has implemented good macroeconomic policies and is experiencing very strong growth and a change in the future of the country that we welcome. I believe the Fund has played a role in that transformation, and that is positive for the future. We have been following decisions by the Turkish government, some of them regarding budget and taxes. In previous months, we have had some reservations. We see this approval of structural reform laws as extremely important as they were part of the program.
April 20, 2006 Press Briefing by Rodrigo de Ratio, IMF Managing Director |
| Question: There are fresh delays regarding the social security reform program in Turkey. Will this affect the IMF-supported program? |
| Answer:
The authorities remain intent on pursuing early passage of the social security reforms, and we think we don't have any reason to expect unusual delays in completing the next program review. The record in Turkey is quite strong. They are pursuing their program and getting the measures that they have decided they need to adopt. The reality is that sometimes it takes longer than anticipated, but I think the track record of Turkey is exemplary in terms of being able to get their program approved in the legislature.
January 26, 2006 Press Briefing by Thomas Dawson, Director of External Relations, IMF |
| Turkey: archived questions and answers |