TURKEY: Government may go back to IMF

29 March 1996

Talks may resume with the IMF after the budget for 1996 has been revised and passed by parliament, according to State Minister Ufuk Soylemez. The minister, one of several with economic responsibilities in the new coalition government, also says that a new austerity programme will not be required (MEED 22:3:96, Cover Story).

New talks with the IMF are expected to focus on the release of the final tranche of a SDR 610 million ($899 million) facility, first approved in July 1994, which the IMF witheld in the third-quarter of 1995. Diplomats in Ankara say that a new facility could be agreed by May, conditional on strict targets for the the budget deficit, monetary aggregates, and external and domestic debt management.

Parliament should pass a budget by mid-April, according to sources in the State Planning Organisation (SPO). A parliamentary commission was expected to start discussions in the week ending 22 March of the draft budget bill for 1996. This was originally submitted in October, but held in abeyance until the new government was formed following December general elections.

Growth estimates in the draft will probably have to be revised downwards to around 4 per cent from 4.5 per cent, the SPO sources say. Economists expect end-year inflation in 1996 to be around 60 per cent and the budget deficit to be little changed in real terms from the actual Th 316 million million ($6,076 million) registered in 1995.

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