{
  "title": "Press Release: IMF Managing Director Sees Impressive Commitment by Turkey to Economic Reforms; Executive Board Approves US$16 Billion Stand-By Credit",
  "publication": "IMF News, February 4, 2002",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr0207",
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  "summary": "Executive Board approved a three-year, SDR 12.8 billion (about US$16 billion) stand-by credit for Turkey to support the government's economic program for 2002-2004.",
  "authors": [
    "Credit Press Release No."
  ],
  "publishDate": "2002-02-04",
  "sections": [
    {
      "heading": "IMF approval and financial terms",
      "content": "- Executive Board approved a three-year, SDR 12.8 billion (about US$16 billion) stand-by credit for Turkey to support the government's economic program for 2002-2004.\n- This decision enables Turkey to draw SDR 7.3 billion (about US$9 billion) from the IMF immediately.\n- The arrangement replaces the previous stand-by credit approved in December 1999 (Press Release No. 99/66) which amounted to SDR 15 billion (about US$19 billion).\n- Total disbursements to Turkey under the previous stand-by credit came to SDR 11.7 billion (about US$15 billion); the remaining undisbursed SDR 3.3 billion (about US$4 billion) were folded into the new arrangement and are included in the total amount."
    },
    {
      "heading": "Managing Director Horst Köhler — key assessment and recommendations",
      "content": "- Commended Turkey's success in developing and implementing a bold and comprehensive economic reform program; described progress as \"impressive\" and affirmed the authorities' commitment to economic and financial recovery through continued steadfast policy implementation.\n- Noted achievements:\n  - Move to a floating exchange rate regime.\n  - Clear course toward debt sustainability through a greatly improved fiscal position.\n  - Important progress in banking sector restructuring, public sector reform, and preparations for privatization.\n- Policy priorities and recommendations:\n  - Flawless implementation of the reform agenda to improve prospects for economic recovery, disinflation, and debt sustainability.\n  - Complete operational restructuring and privatization of state banks; finalize legal and regulatory framework for private bank recapitalization.\n  - Pursue planned reduction in public sector employment vigorously while minimizing social costs.\n  - Further improve public procurement, overhaul the tax system, reform public sector employment, and consolidate budget institutions.\n  - Central bank to adhere strictly to its base money targets and finalize preparations for transition to formal inflation targeting.\n  - Strengthen regulatory and supervisory frameworks and establish institutional capabilities to resolve assets taken over by the Savings Deposit Insurance Fund (SDIF).\n- Concluded that continued strong implementation and renewed political unity justify the Fund's exceptional support to Turkey's reform agenda."
    },
    {
      "heading": "Annex — Recent developments (late 2001 to January 2002)",
      "content": "- September 11 events produced exogenous shock affecting exports, tourism, access to international financial markets, privatization, and foreign direct investment.\n- Resulting strains: large increases in domestic interest rates in September-October 2001.\n- By November 2001, Turkey faced an external financing gap of US$10 billion for 2002, with gaps of US$1 billion in each of 2003 and 2004.\n- Market sentiment improved with prospects of a strengthened program supported by additional external financing:\n  - Turkish lira appreciated by more than 10 percent against the U.S. dollar in January, bringing cumulative appreciation since mid-October 2001 to more than 20 percent.\n  - Interest rate on the benchmark bond fell by more than 20 percentage points (to around 70 percent at end-January).\n  - Stock market rose more than 80 percent from its post-September 11 low."
    },
    {
      "heading": "Program summary — objectives and structure (2002–2004)",
      "content": "- Program aims:\n  - Protect the economy against future crises while laying the basis for sustained economic growth.\n  - Reduce risk of future crises via: continuation of the floating exchange rate regime; financial system reform and strengthening; and expenditure and tax reforms to sustain medium-term fiscal adjustment and ensure debt sustainability.\n- Macroeconomic framework and targets:\n  - 2002 GNP projected to grow by 3 percent with upside potential given the depth of the 2001 recession.\n  - Authorities committed to reach the CPI inflation target of 35 percent in 2002, from 68.5 percent in December 2001.\n  - Government intends to maintain the public sector primary surplus in 2002 at the level of 6.5 percent of GNP.\n  - Current account expected to move from a surplus of about US$2 billion in 2001 to a deficit of a similar magnitude in 2002.\n  - Capital account deficit projected at US$3 billion in 2002, compared with US$13 billion in 2001.\n  - Conditional statement: Provided interest rates converge to program levels and the primary surplus remains strong, Turkey's public debt would be sustainable in the medium term and shift to a declining trend relative to GNP.\n- Fiscal policy and debt management:\n  - Parliament passed a central government budget consistent with achieving a public sector primary surplus of 6.5 percent of GNP in 2002.\n  - Authorities started implementing measures to enhance revenues and rationalize expenditures.\n  - Plans to offer securities matched to investor needs; widen investor base; lengthen maturity of government debt; deepen liquidity of benchmark issues.\n- Monetary policy:\n  - Goal to lower inflation and prepare for successful inflation targeting; improving financial market conditions and stabilizing exchange rate expected to rebuild confidence and free monetary policy to target inflation.\n- Structural reform priorities:\n  - Banking sector: restore credit flows, enforce rigorous loan portfolio valuation, offer limited public support for private bank recapitalization, resolve large amount of SDIF assets, strengthen regulatory/supervisory frameworks.\n  - Public sector: sustain fiscal adjustment, enhance fiscal transparency, reform tax system, consolidate fiscal activities into fewer institutions, enhance social protection to cushion retrenchment impacts.\n  - Private sector: revitalize privatization in 2002, foster greater foreign direct investment, improve transparency and governance, and enhance communication of program aims."
    },
    {
      "heading": "Turkey: Selected Indicators, 1999–2004 (selected figures preserved exactly as in source)",
      "content": "- Real sector (in percent)\n  - Real GNP growth rate: 1999 -6.1; 2000 6.3; 2001 -8.5; 2002 3.0; 2003 5.0; 2004 (blank in source)\n  - GNP deflator: 1999 55.8; 2000 50.9; 2001 60.7; 2002 48.9; 2003 24.9; 2004 13.1\n  - WPI (12-month, end-of-period): 1999 62.9; 2000 32.7; 2001 88.6; 2002 31.0; 2003 16.2; 2004 12.0\n  - CPI (12-month, end-of period): 1999 68.8; 2000 39.0; 2001 68.5; 2002 35.0; 2003 20.0\n  - Average nominal treasury bill interest rate: 1999 106.2; 2000 38.0; 2001 99.7; 2002 69.6; 2003 46.0; 2004 32.4\n  - Average ex-ante real interest rate 1/: 1999 32.0; 2000 -9.4; 2001 33.2; 2002 27.5; 2003 20.5\n- Central government budget (in percent of GNP)\n  - Primary balance 2/: 1999 1.5; 2000 4.2; 2001 5.4; 2002 5.6\n  - Net interest payments 3/: 1999 15.8; 2000 23.2; 2001 13.5\n  - Overall balance: 1999 -11.6; 2000 -18.2; 2001 -15.2; 2002 -10.6; 2003 -7.8\n- Consolidated public sector (in percent of GNP)\n  - Primary balance: 1999 -2.0; 2000 2.3; 2001 5.7; 2002 6.5\n  - Net interest payments 4/: 1999 22.1; 2000 21.9; 2001 24.7; 2002 18.4; 2003 13.3\n  - PSBR (including CBT profits): 1999 24.2; 2000 19.6; 2001 19.0; 2002 11.9; 2003 9.3; 2004 6.8\n  - Net debt of public sector: 1999 61.0; 2000 57.4; 2001 92.2; 2002 81.3; 2003 73.3; 2004 69.4\n  - Net external: 1999 20.1; 2000 18.3; 2001 35.1; 2002 30.6; 2003 28.5; 2004 (blank)\n  - Net domestic: 1999 40.9; 2000 39.1; 2001 54.2; 2002 46.2; 2003 42.7\n  - Central government (gross) (example item listed): 42.5; 70.3; auctioned and other cash debt: 25.8; 23.4; 25.3; 23.1; bank recapitalization: 17.4; 35.6; 28.4\n- External sector (in percent)\n  - Current account balance: 1999 -0.7; 2000 -4.9; 2001 1.3; 2002 -1.2\n  - Gross external debt: 1999 55.0; 2000 56.6; 2001 75.4; 2002 71.7; 2003 66.7; 2004 63.3\n  - Net external debt: 1999 34.0; 2000 37.0; 2001 51.6; 2002 48.1; 2003 44.4; 2004 40.8\n  - Short-term external debt (by remaining maturity): 1999 20.8; 2000 23.0; 2001 23.3; 2002 20.4\n- Monetary aggregates and other indicators\n  - Seignorage 5/: 1999 3.2; 2000 1.8; 2001 1.0; 2002 0.7\n  - Nominal growth of broad liquidity (in percent): 1999 96.9; 2000 40.2; 2001 75.1; 2002 27.4; 2003 17.1\n- In billions of U.S. dollars (selected)\n  - Privatization proceeds: 1999 0.1; 2000 3.3; 2001 2.8; 2002 2.5\n  - Net external financing of central government: 1999 1.4; 2000 4.1; 2001 -2.7; 2002 -1.0\n  - Amortization: 1999 6.0; 2000 6.2; 2001 8.2; 2002 8.4; 2003 8.0\n  - Gross borrowing: 1999 7.4; 2000 10.3; 2001 5.5; 2002 7.5; 2003 7.0\n  - Of which: Eurobond issues: 1999 2.2; 2000 4.5; 2001 4.7\n  - GNP: 1999 187.4; 2000 201.3; 2001 150.3; 2002 165.6; 2003 183.0\n  - GNP (in quadrillions of Turkish lira): 1999 78.3; 2000 125.6; 2001 184.7; 2002 283.2; 2003 371.6; 2004 441.3\n\nPress Release No. 02/7, February 4, 2002.\n\n---\n\n\n References\n\n- Republic of Türkiye and the IMF\n- Press Releases\n- PRESS CENTER\n- Press Release No. 99/66\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr0207"
    }
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    "Authors: Credit Press Release No.",
    "Published: February 4, 2002",
    "Executive Board approved a three-year, SDR 12.8 billion (about US$16 billion) stand-by credit for Turkey to support the government's economic program for 2002-2004.",
    "This decision enables Turkey to draw SDR 7.3 billion (about US$9 billion) from the IMF immediately.",
    "The arrangement replaces the previous stand-by credit approved in December 1999 (Press Release No. 99/66) which amounted to SDR 15 billion (about US$19 billion).",
    "Total disbursements to Turkey under the previous stand-by credit came to SDR 11.7 billion (about US$15 billion); the remaining undisbursed SDR 3.3 billion (about US$4 billion) were folded into the new arrangement and are included in the total amount.",
    "Commended Turkey's success in developing and implementing a bold and comprehensive economic reform program; described progress as \"impressive\" and affirmed the authorities' commitment to economic and financial recovery through continued steadfast policy implementation.",
    "Noted achievements:",
    "Policy priorities and recommendations:",
    "Concluded that continued strong implementation and renewed political unity justify the Fund's exceptional support to Turkey's reform agenda.",
    "September 11 events produced exogenous shock affecting exports, tourism, access to international financial markets, privatization, and foreign direct investment.",
    "Resulting strains: large increases in domestic interest rates in September-October 2001.",
    "By November 2001, Turkey faced an external financing gap of US$10 billion for 2002, with gaps of US$1 billion in each of 2003 and 2004.",
    "Market sentiment improved with prospects of a strengthened program supported by additional external financing:",
    "Program aims:",
    "Macroeconomic framework and targets:",
    "Fiscal policy and debt management:",
    "Monetary policy:",
    "Structural reform priorities:",
    "Real sector (in percent)",
    "Central government budget (in percent of GNP)",
    "Consolidated public sector (in percent of GNP)",
    "External sector (in percent)",
    "Monetary aggregates and other indicators",
    "In billions of U.S. dollars (selected)",
    "[Republic of Türkiye and the IMF](http://www.imf.org/external/country/TUR/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[Press Release No. 99/66](https://www.imf.org/external/np/sec/pr/1999/pr9966.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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