Press Release No. 05/97

Press Release: Statement by IMF First Deputy Managing Director Anne Krueger at the Conclusion of Her Visit to Turkey

May 6, 2005

Ms. Anne Krueger, First Deputy Managing Director of the International Monetary Fund (IMF), issued the following statement today in Ankara at the conclusion of her visit to Turkey:

"I am very pleased to be in Turkey at a time of such strong economic performance. Average real GNP growth over the past three years has been close to 8 percent: last year it was just short of 10 percent. That contrasts with average growth of 2.3 percent between 1995 and 2001. And that acceleration in growth has been achieved in the context of sharply declining inflation and fiscal consolidation. The inflation rate has fallen from 70 percent three years ago, to just over 8 percent now—its lowest level for 35 years. The primary surplus was almost 7 percent of GNP last year—above the 6.5 percent target, and the public debt to GNP ratio has fallen by 30 percentage points of GNP since the peak in 2001, though it needs to fall further.

"During my brief visit I have had a series of very productive meetings. I was fortunate to be able to meet with the Prime Minister in Istanbul yesterday. I have also had useful discussions with Minister Babacan, Minister Unakitan and Governor Serdengeçti. Tomorrow I will meet with Minister Gűl.

"I also attended a seminar organized in Istanbul by Tusiad, on May 4^th; and the Istanbul Forum yesterday. Today I spent some time at the Central Bank conference on Macroeconomic Policies for EU Accession.

"As you know, the government has requested a new $10 billion standby arrangement with the IMF which the Fund's Executive Board will consider next week. We believe that this new standby arrangement will support continuing good economic performance and the further economic reforms that are needed. Macroeconomic stability has been achieved and I am confident that if the momentum of the reform process is maintained, Turkey has the chance to raise its potential growth rate and the real incomes of Turkish citizens.

"Now is the time, while the global economic environment remains favorable, to implement the structural reforms that will raise the potential growth rate of the Turkish economy, reduce the vulnerability to outside shocks, and accelerate the transformation to a stable, well-functioning market economy. Further reforms in the financial sector, in the management of the public finances, and in the labor market and the business environment more generally, will all help the economy become more flexible and so raise the potential growth rate and real incomes.

"There is of course considerable interest in the economic policies needed for Turkish accession to the European Union. This is positive. But the best reason for pursuing further economic reforms is that these will raise the sustainable growth rate of the Turkish economy and raise real incomes for all Turkey's citizens. That these reforms will also help prepare Turkey for EU accession is an added bonus," Ms. Krueger said.