Press Release No. 04/31

Press Release: Second Stage of IMF Discussions for the Seventh Review of Turkey's Stand-By Arrangement to Start on February 27

February 20, 2004

Second Stage of IMF Discussions for the Seventh Review of Turkey's Stand-By Arrangement to Start on February 27

An IMF mission, headed by Mr. Reza Moghadam, will visit Turkey from February 27 to March 12, 2004 to continue discussions started in January for the seventh review under Turkey's Stand-By Arrangement with the Fund.

The mission will discuss with the authorities the remaining steps needed to achieve the 6.5 percent of GNP primary fiscal surplus target for 2004. These include measures to compensate on a lasting basis for the larger-than-budgeted increases in pensions and social security costs (as a result of the decision on minimum wages), and for a lower-than-expected tax revenue base.

The mission will also discuss the detailed structural reform agenda for the remainder of the program. Discussions on the structural front will focus on actions to enhance the long-term viability of the fiscal accounts, improve budget management and revenue collection, ensure the effectiveness and independence of the Banking Regulation and Supervision Agency (BRSA)/ Saving Deposit Insurance Fund (SDIF), and enhance the environment for private sector led investment and growth. In this context, key issues will be the progress in advancing privatization, resolving intervened banks and accelerating asset sales, and reforming state banks.

The Stand-By Arrangement supporting Turkey's economic program covers 2002-04. Of the total IMF financing of some US$19.2 billion, about US$2.5 billion remain to be disbursed. Completion of the seventh review by the Fund's Executive Board would trigger a disbursement of about US$500 million.