Press Release: Mission Discussions for the Sixth Review of Turkey's Stand-By Arrangement Concluded
October 15, 2003
An IMF mission team headed by Mr. Reza Moghadam has concluded its discussions with the Turkish authorities for the sixth review under the stand-by arrangement with the Fund. The stand-by arrangement supporting Turkey's economic program covers 2002-04. Of the total Fund financing of US$17½ billion, about US$2½ billion remain to be disbursed (see Press Release No. 03/168).
The authorities and the mission have reached agreement, ad referendum, on the steps needed for the completion of the review. Specifically, the government has identified budget measures to ensure that the public sector primary surplus target of 6.5 percent of GNP for 2003 will be achieved. It has also prepared a budget for 2004 consistent with the continuation of a 6.5 percent of GNP primary surplus. On the structural policy front, agreement has been reached on a number of steps designed to maintain the reform momentum. These steps relate to the Public Financial Management and Control Law, the completion of direct tax reform, actions to ensure that the rationalization of employment in state economic enterprises will be completed by end-2003 as planned, the privatization plan for Turk Telekom, and legislation to reinforce the independence of BRSA and other steps to further strengthen the banking sector.
Developments in the Turkish economy remain positive. The growth projections of 5 percent for both 2003 and 2004 have been maintained. Monetary policy is being conducted skillfully, bringing the inflation targets of 20 percent for 2003 and 12 percent for 2004 within reach. Swift adoption of the budget measures for 2003, submission of the government budget for 2004, and implementation of the structural reform measures noted above would help Turkey sustain the positive momentum and achieve the program's targets.
Rapid implementation of these economic policy actions would also lay the basis for the IMF's Executive Board to meet and consider the completion of the sixth review in November. Completion of the review would trigger another disbursement of IMF financing of close to US$500 million.