The IMF is expected in October to release a second tranche of the $742 million standby facility approved in July, say senior officials. However, the World Bank is concerned about the progress of structural adjustment, particularly privatisation.
The IMF is broadly satisfied that the government has met the stabilisation targets pledged in its letter of intent for the facility, although the fund has reservations about the progress of structural changes, and bringing the unregistered economy under control, according to central bank governor Yaman Toruner, speaking on 26 September.
He pointed out that the central bank’s foreign exchange and gold reserves reached an all-time high of $7,800 million on 23 September, sufficient to meet all official external debt servicing in 1995. Over the next 12 months, Turkey will have to repay $6,400 million of foreign debt, according to Toruner. ‘For the time being, we don’t have any worries,’ says Bulent Ozgen, general director of foreign relations at the treasury.
Finance Minister Ismet Atilla says the government has been particularly successful in controlling the budget deficit. The budget deficit in January- August amounted to only about one third of the TL 191.8 million million ($5,047 million) targeted for the year, says Attila.
However, the World Bank has yet to be satisfied about progress on the deeper structural adjustment it views as necessary to underpin the improvement in monetary and fiscal performance. The World Bank has a longer-term perspective than the short-term focus on stabilisation at the IMF.
A structural adjustment facility valued at around $500 million has been ready since July, but has not been presented to the World Bank board principally for lack of political assurance on the government’s ability to push through privatisation. The government had expected the loan in October, but now it may not be approved until early 1995.
Approval of the loan mainly depends on the passage of a comprehensive privatisation law in parliament as evidence of the government’s commitment.