Press Release No. 04/104

Press Release: IMF Staff Statement on Discussions for the 2004 Article IV Consultation and Eighth Review of Turkey's Stand-By Arrangement

June 1, 2004

The following statement was issued on May 31, 2004 in Ankara by Odd Per Brekk, the IMF Senior Resident Representative in Turkey:

"An IMF mission will visit Turkey during June 3-19. Its task will be two-fold: (i) to conduct the Article IV consultation with Turkey; and (ii) to carry out the discussions for the eighth review under Turkey's Stand-By Arrangement. The team, headed by Reza Moghadam, will first visit Istanbul to meet with the private sector, financial institutions, academics and non-governmental organizations. This will be followed by discussions with government officials in Ankara. Michael Deppler, Director of the IMF's European Department, will join the mission during June 7-10.

"As part of its surveillance function, the IMF conducts annual or bi-annual Article IV consultations with all member countries. The Article IV discussion provides an opportunity to step back from short-term concerns, to take stock of achievements and chart the best course for policies going forward. A key task will be to assess Turkey's growth prospects and the policies that might enhance them—critical both because of its implications for debt dynamics and for accommodating a fast growing labor force. Other topics for discussion will include policies needed to sustain the disinflation effort, and maintain the fiscal effort in the medium-term and improve its quality. Steps to further strengthen the banking system, and reforms to enhance the environment for private-sector investment will also feature in the discussions.

"The parallel discussions for the eighth program review will focus on the implementation of the authorities' economic agenda for 2004, set out in the Letter of Intent for the seventh review dated April 2, 2004. A key focus will be progress towards achieving the targeted 6½ percent of GNP public sector primary surplus. Other important areas will include progress on tax administration and social security reform, preparation of the new Banks Act, sales of the assets of intervened banks, the strategy for state banks, and privatization.

"It is expected that the Executive Board will meet to conclude the Article IV consultation and complete the eighth program review before its August recess."