TURKEY: Faint praise from IMF

31 January 1997

Turkey appears not to be heading for an economic crisis in 1997, IMF managing director Michel Camdessus told a senior delegation headed by State Minister Fehim Adak. The mission was in Washington in mid-January with the aim of gaining support from the IMF, the World Bank and the US government for the government's plans for medium-term economic stabilisation. An IMF delegation will now visit in February, followed by US assistant treasury secretary Larry Summers in March.

Ankara is seeking IMF approval to reinforce Turkey's international creditworthiness, in order to service a commercial borrowing requirement for 1997 of about $2,000 million. The IMF did not give its full support for the government's policies, however, maintaining that reform of the social security and tax systems remained a necessity.

Talks with Johannes Linn, vice-president of the World Bank for Europe and Central Asia, also resulted in a mixed response. Turkey made a number of proposals at the meeting, including:

adopting the so-called 'Indonesian model' of converting high-interest domestic debt to low-interest international loans, which the World Bank would co-ordinate. Linn reportedly advised Ankara to develop its dialogue with the IMF first, however

Turkish contractors receiving a larger share of World Bank-funded contracts

a review of about $1,400 million worth of World Bank projects in the pipeline should be received for speedier implementation

obtaining World Bank support for and participation in Turkish energy and irrigation projects.

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