Press Release No. <a name="P16_75"></a>03/49

Mr. Horst Köhler, the Managing Director of the International Monetary Fund (IMF), today issued the following statement after the signing by the Turkish authorities of their Letter of Intent:

"The IMF welcomes the Turkish government's signing of a new Letter of Intent. This Letter sets out strong policy commitments in all key areas of the economic program, including a 6.5 percent of GNP primary surplus for 2003 and beyond, a set of measures to strengthen the underpinnings of the fiscal accounts, strengthening the independence of the Bank Regulation and Supervision Agency (BRSA), reducing redundant positions in state enterprises, and advancing privatization.

"Full implementation of these commitments will contribute to a stable macroeconomic environment and bring about fundamental structural reform, thereby helping the government achieve its goals of disinflation, debt reduction, and lasting rapid growth. The focus of the program thus remains very much on strengthening long term performance and growth prospects.

"In this vein, the government has proposed, and the IMF has welcomed, that Fund disbursements under the program be rephased more evenly over the remainder of the program. Specifically, the revised Letter of Intent calls for purchases of about US$700 million on the occasion of the Fourth Review (instead of about US$1.6 billion in the original program) and of about US$500 million at each of the remaining seven reviews. This is a courageous step that speaks directly to concerns about the authorities' determination to implement the policies spelled out in the Letter over the 20 months remaining under the program.

"We believe this initiative—together with full implementation of the policy commitments, the government's policy (spelled out in the Letter) to block discretionary spending to help minimize immediate financing requirements, and other financing prospects—should further strengthen confidence in the Turkish economy.

"The Letter of Intent will now be forwarded to the IMF Executive Board. The prior actions needed to complete the Fourth Review have already been completed. On this basis, a meeting of the Board to consider the authorities' request for completion of the Fourth Review has been scheduled for April 18, 2003."

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