Turkey and the IMF
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An IMF mission headed by Mr. Juha Kähkönen will start discussions for the fifth review under Turkey's IMF-supported program in Ankara on May 21. Turkey's stand-by arrangement with the IMF covers the 2002-04 period. Of the total Fund financing of some US$17 billion, about US$3 billion remain to be disbursed. Completion of the fifth review would trigger a disbursement of about US$500 million.
The increased momentum in economic reform has helped to improve financial market sentiment. The Turkish authorities have laid out an ambitious economic stabilization and reform agenda for 2003, and have taken important initial steps in implementing this agenda. These efforts were instrumental in allowing the fourth program review to be completed on April 18. Together with the end of hostilities in Iraq and a positive global market sentiment toward emerging market economies, this has helped interest rates to fall while the Turkish lira has strengthened. The more benign environment also means that the government's macroeconomic targets of 5 percent growth and 20 percent inflation in 2003 remain attainable.
The mission's discussions will focus on steadfast implementation of the government's commitments so that the favorable momentum can be maintained. The government has an excellent opportunity to turn the recent positive developments into a lasting improvement in the economy. To this end, it needs to create a strong and consistent record of implementing its economic program. Meeting the conditions for completing the fifth review, which include a number of quantitative targets and structural measures spelt out in the government's Letter of Intent for the fourth review, will be an important step in this regard.
This will be Mr. Kähkönen's last mission to Turkey, after which Mr. Reza Moghadam will take over as new mission chief.
IMF EXTERNAL RELATIONS DEPARTMENT